Baker Corporation acquired, for an installed cost of $40,000, a machine having a recovery period of 5 years. Using the applicable percentages from Table 3.2, Baker calculates the depreciation in each year as follows:

 

 

Percentages

Depreciation

 

Cost

(from Table 3.2)

[(1) x (2)]

Year

(1)

(2)

(3)

1

$40,000

20%

$ 8,000

2

40,000

32

12,800

3

40,000

19

7,600

4

40,000

12

4,800

5

40,000

12

4,800

6

40,000

5

2,000

Totals

 

100%

$40,000

Column 3 shows that the full cost of the asset is written off over 6 recovery years.