MACRS

CFA Level II
#1

Let’s say we buy asset at 100, and we are going to sell it at 10 at the end of 3 years. So the salvage value is 90. Do we use the MACRS spreadsheet to calculate depreciation on 100 or do we use it on 90? Thanks in advance.

#2

I don’t know if your numbers in the first sentence make sense. But from what I’ve always understood is depreciation is calculated from the historical/original price paid.

#3

Salvage would be 10. MACRS is calculated off the purchase price (100 in your example). If you were using straight line, it would be off 90 (price net of salvage)

#4

ShintreH ,salvage price is 10 in your example , not 90

#5

I don’t think L2 cares much about depreciation methods.

#6

Thanks for the replies, regarding the first statement, I meant 90 is diff between salvage and purchase value.

#7

i know what your asking, it’s based off the initial price (100), you dont recalc it off current net book like you would the other dep methods.