OS/OS/2024 MSEsoYCH16 Amr Almalla 'Tz

lower
The larger the depreciation expense , the
companies
the taxable income , a therefore the lower a

tax bill .
 Tz

an assets unadjusted basis is the assets original .

cost

Adjusted basis is the cost basis of an asset During

its
lifetime including
,
any additional expenses or
liabilites taken out on the asset
 3
12

book value : value of an asset as Recorded on a

companies balance sweet

market value : Price an asset would sell for on

the market
open
 2

annum
-

!
a

beggining of book value =

$100, 000

Changes first ->

years = $40, 000

$ 24 ,
000

$14, 000

After 2 years the book value is :

BVz = $100 ,
000 -
(40000 + 24000)

BV =
$36
, 000

b)
current market value $20
,000
=

current book value =

$36
, 000

Difference =
20000 = 16000
36
0 000 -

current market value is lower than current book value

 2

Di
= $170000 - $20000
3

=
$50 , 000

BVz =
B- 2 .

Da

= $170000 -

2 .
$50000

=
$70 ,
000
 %2

d=
Dz =
d .
B .

(l-d)2
= .
$500 ,
000
· (1-3)
= $120, 000

I So % DB :

d=
2

Dz = d .

B .

(1 d) -

=
↳ .

$500
, 000
.

(1-()
= $105 ,
000

SLi

Dz =
50000
500 000
-

= $90 000 ,
 T2

a) d = =
Dz d = .

B .

(1-d(
= .

78000 ·
(1-5)
= $18 ,
720

Dy = d B .
.

(1-d)"-1
=
5 .
78000 .
(1-3)3
= $6 ,
739 .
2

b) /1- dS2
.

BV B = .

= 78000(1 -

E)
= $28 ,
080

BVy = B .

(l-d)Y

= 78000(1-3)
= $10 108 ,
. S
 /12

>
-

a) Recovery period for personal

property are 3, 5, 7 10 15,
, ,
120
years

b) Recovery period 539 years

for real property are 27 .
 9
12

a) half year convention implies that each asset is bought or

Introduced in the middle of thefax year it was installed in

b) It is in the for year -H where the

shown vows ,
n is

Recovery period
 192

BVz = B- (Di + DztDz)

=
B -

(d .. B + dy -
B+ dzB)

= B- (di + da + d) .

400,000
2 + 0 32 + 0
192) .

= $400000 10
.

.
.
-

=
$115200

BVg =
BVy- DS
=
(BUs- Dy) Ds -

=
(BVz) -

(Dy + Ds)

BVz- (dy ds) B

= + ..

= $115 200 (0 1152 + 0

1152) 40000 0
-

.
,
.

= $23040

Br Since the period

Recovery is Syrs
= 0
 "Te

9 $2100000
CD :
350000 02

=
$6/02

CDA , -3 = 175000 02 .

46/02
= $1 , , 000
050

b) $1050000
$2 , 100 000 -

CDAy
= ,

100 00 0

= $10 5/02
.
 Fr

tax allowed depletion = 0 S

.
.

$140
, 000 = $70, 000 per year

Gl ,
= 34300 +· $9 .

se/t

=
$336 ,
826

PDA , =
0 . 1 * $336826
=
33682 .

62$70 000 ,

G7z : Soloot -
$10 5/t .

=
$526050

PDAy =
0 . 1 *$526 050 ,

=
, 605($70000
$52

G7z :
71900t $11 .

23/t
= $807 , 437

PDAz = 0 . 1* $807 ,
437

=
80743 7 > .
$70000

Depletion of mine in
year - is $33 682
,
.
6

Depletion of mine in
year 2 is $52
, 60

Depletion of mine in
year 3 is $70, 000