If B = $400,000, n = 6 years, and S is estimated at 15% of B for a new pavement recycling machine, use the SYD method to determine (a) the book value after 3 years, and (b) the rate of depreciation and the depreciation amount in year 4.
What will be an ideal response?
B = $400,000; n = 6 and S = 0.15(400,000) = $60,000
(a) Use Equation. [16A.2] and S = 21
BV3 = 400,000 – [ 3(6 – 1.5 + 0.5) ](400,000 – 60,000) = $157,143
21
(b) By Equation [16A.3] and t = 4:
d4 = 6 – 4 + 1 = 3/21 = 1/7
21
D4 = d4(B – S)
= (3/21)(400,000 – 60,000)
= $48,571
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