Answer to Question #291444 in Management for Amir

Question

Bernstein Tractor Company has just invested in new equipment costing $16,000. The equipment falls in the five-year property class for cost recovery (depreciation) purposes. What depreciation charges can it claim on the asset for each of the next six years?

Answer 1

Under the modified accelerated cost recovery value system depreciation, depreciation charges are calculated by dividing the purchase price by salvage value. That's 16000÷6 = 2666.6 dollars

The depreciation charge for each year is 2666.6 dollars.