Chapter 13 Income Taxes
Chapter 13 Income Taxes
Chapter 13 Income Taxes
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188 <strong>Chapter</strong> <strong>13</strong> <strong>Income</strong> <strong>Taxes</strong><br />
Method Life Value* Depreciation Loss<br />
SL 10 years $ 1,000<br />
SOYD 5 25,000<br />
DDB 4 0<br />
150%DB 15 0<br />
*This was assumed for depreciation purposes<br />
Solution<br />
Depreciation Depreciable Salvage Recaptured Capital<br />
Method Life Value* Depreciation Loss<br />
SL 10 years $ 1,000 $20,200<br />
SOYD 5 25,000 $ 5,000<br />
DDB 4 0 35,000<br />
150%DB 15 0 21,000<br />
SL<br />
Depreciation = (100,000 - 1,000) = 9,900<br />
Book Value = 100,000 - 2(9,900) = 80,200<br />
Capital Loss = 80,200 - 60,000 = $20,200<br />
SOYD<br />
Depreciation (Year 1 + Year 2) = (100,000 - 25,000) = 45,000<br />
Book Value = 100,000 - 45,000 = 55,000<br />
Recaptured Depreciation = 60,000 - 55,000 = $5,000<br />
DDB<br />
Depreciation Year 1 = (100,000) = 50,000<br />
Depreciation Year 2 = (100,000 - 50,000) = 25,000<br />
Book Value = 100,000 - 75,000 = 25,000<br />
Recaptured Depreciation = 60,000 - 25,000 = $35,000<br />
150%DB<br />
Depreciation Year 1 = (100,000) = 10,000<br />
Depreciation Year 2 = (100,000 - 10,000) = 9,000<br />
Book Value = 100,000 - 19,000 = 81,000<br />
Capital Loss = 81,000 - 60,000 = $35,000
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