An energy production company has the following information regarding the acquisition of new gas-turbine equipment.
Purchase price = $780,000
Trans-oceanic shipping and delivery cost = $4300
Installation cost (1 technician at $1600 per day for 4 days) = $6400
Tax recovery period = 15 years
Book depreciation recovery period = 10 years
Salvage value = 10% of purchase price
Operating cost (with technician) = $185,000 per year
The manager of the department asked your friend in Accounting to enter the appropriate data into the tax-accounting program. What are the values of B, n, and S in depreciating the asset for tax purposes that he should enter?
B = 780,000 + 4300 + 6400 = $790,700
n = 15 years
S = 0.10(780,000) = $78,000
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