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Note: For most up-to-date depreciation and income tax information, consult the book’s
website at http://www.prenhall.com and click on “Tax Information”
9.1 The loss of value is defined as the purchase price of an asset less its market
value, also known as economic depreciation. Economic depreciation = $20,000
- $7,000 = $13, 000
9.2 Economic depreciation = $20,000 - $14,000 = $6,000
Cost Basis
9.3
• Total property value with the house:
Land Building
Original cost $155,000 $245,000
Add: New building $1,250,000
Demolition expenses $15,000
Property value $155,000 $1,510,000
Page | 1
Contemporary Engineering Economics, Fifth Edition, by Chan S. Park. ISBN: 0-13-611848-8
© 2011 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction,
storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458.
9.5
• Unrecognized profit
Old drill press (Book value) $46,220
Trade-in allowance $40,000
Unrecognized loss $6,220
• Cost basis
Cost of new drill $148,000
Plus: unrecognized loss $6,220
Cost basis of new drill $154,200
Comments: If the old drill were sold on the market (instead of trade-in), there
would be no unrecognized loss. In that situation, the cost basis for the new drill
would be $148,000.
9.6
• Unrecognized profit
Old lift truck (Book value) $7,808
Trade-in allowance $9,000
Unrecognized gains $1,192
• Cost basis
Cost of new truck $38,000
Minus: unrecognized gains $1,192
Cost basis of new truck $36,808
Comments: If the old truck were sold on the market (instead of trade-in), there
would be no unrecognized gains. In that situation, the cost basis for the new
drill would be $38,000.
Page | 2
Contemporary Engineering Economics, Fifth Edition, by Chan S. Park. ISBN: 0-13-611848-8
© 2011 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction,
storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458.
1
α = 2( ) = 0.25
8
D3 = 0.25 ×125, 000 × (1 − 0.25)3−1
= $17,578
n Dn Bn
1 $20,857 $52,143
2 $14,898 $37,245
3 $10,641 $26,603
4 $7,601 $19,002
5 $5,429 $13,573
6 $5,287 $8,287
7 $5,287 $3,000
Comments: If the regular DDB deduction were taken during the fifth year,
B5 would be less than the salvage value. Therefore, it is necessary to adjust D5 .
The number in the box represents the adjusted value. No switching is common for
this type of situation whenever the salvage value is high.
Page | 3
Contemporary Engineering Economics, Fifth Edition, by Chan S. Park. ISBN: 0-13-611848-8
© 2011 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction,
storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458.
n Dn Bn
1 $61,500 $184,500
2 $46,125 $138,375
3 $34,594 $103,781
4 $25,945 $77,836
5 $19,459 $58,377
6 $14,594 $43,783
7 $7,783 $36,000
8 0 $36,000
9.12
⎛1⎞
(a) α = ⎜ ⎟ 2 = 0.4
⎝5⎠
(b) D2 = (0.4)(0.6)(36, 000) = $8, 640
Page | 4
Contemporary Engineering Economics, Fifth Edition, by Chan S. Park. ISBN: 0-13-611848-8
© 2011 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction,
storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458.
Units-of-Production Method
9.15 Allowed depreciation amount
9.16
$68, 000 − $7,500
D5,000 hours = (5,500)
50, 000
= $6, 655
9.17
(d) DDB(without conversion to SL): D1 = 0.2(157, 000) = 31, 400; B1 = $125, 600
(e) DDB(with conversion to SL): D1 = 0.2(157, 000) = 31, 400; B1 = $125, 600
Tax Depreciation
Page | 5
Contemporary Engineering Economics, Fifth Edition, by Chan S. Park. ISBN: 0-13-611848-8
© 2011 Pearson Education, Inc., Upper Saddle River, NJ. All rights reserved.
This material is protected by Copyright and written permission should be obtained from the publisher prior to any prohibited reproduction,
storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise.
For information regarding permission(s), write to: Rights and Permissions Department, Pearson Education, Inc., Upper Saddle River, NJ 07458.
(b)
n MACRS Depreciation
1 $44,442
2 $76,164
3 $54,394
4 $38,844
5 $27,772
6 $27,741
7 $27,772
8 $13,855
9.20 (a) Cost basis: $190, 000 + $25, 000 = $215, 000
(b)
D1 = $30, 723.5, D2 = $52, 653.5, D3 = $37, 603.5, D4 = $26,853.5
D5 = D7 = $19,199.5, D6 = $19,178, D8 = $9,589
Page | 6
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The Project Gutenberg eBook of Books and their
makers during the Middle Ages
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eBook.
Language: English
BY
Geo. Haven Putnam, A.M.
AUTHOR OF “AUTHORS AND THEIR PUBLIC IN ANCIENT
TIMES”
“THE QUESTION OF COPYRIGHT,” ETC.
VOLUME I.
476-1600
G. P. PUTNAM’S SONS
NEW YORK LONDON
27 WEST TWENTY-THIRD 24 BEDFORD STREET,
STREET STRAND
The Knickerbocker Press
1896
Copyright, 1896
by
G. P. PUTNAM’S SONS
Entered at Stationers’ Hall, London
to
The Memory of My Wife
who served me for years both as eyesight
and as writing-arm
and by whose hand the following pages
were in large part transcribed
this work is dedicated
PREFACE.