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amsouth inc bought a machine for 50 000 on january 2 2004 management expects to use 671220

AmSouth, Inc., bought a machine for $50,000 on January 2, 2004. Management expects to use the machine for 10 years, at the end of which time it will have a $1,000 salvage value. Consider the following questions independently:

(a) If AmSouth uses straight line depreciation, what will be the book value of the machine on December 31, 2007?

(b) If AmSouth uses double declining balance depreciation, what will be the depreciation expense for 2007?

(c) If AmSouth uses double declining balance depreciation, followed by switching to straight line depreciation, when will be the optimal time to switch?

(d) If Ansouth uses 7 year MACRS and sells the machine on April 1, 2007, at a price of $30,000, what will be the taxable gains?

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