question archive Under MACRS, an asset which originally cost $100,000, incurred installation costs of $10,000, and has an estimated salvage value of $25,000, is being depreciated using a 5?year normal recovery period
Under MACRS, an asset which originally cost $100,000, incurred installation costs of $10,000, and has an estimated salvage value of $25,000, is being depreciated using a 5?year normal recovery period
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Under MACRS, an asset which originally cost $100,000, incurred installation costs of $10,000, and has an estimated salvage value of $25,000, is being depreciated using a 5?year normal recovery period. What is the depreciation expense in year 1?
(a) $15,000
(b) $12,750
(c) $11,250
(d) $22,000
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Answer:
Depreciation Under MACRS usinga 5-year normal recovery period
|
Year |
Cost of the Asset |
% Dep Table |
Annual Depreciation |
|
1 |
1,10,000 |
.200 |
22,000 |
|
2 |
1,10,000 |
.320 |
35,200 |
|
3 |
1,10,000 |
.192 |
21,120 |
|
4 |
1,10,000 |
.115 |
12,650 |
|
5 |
1,10,000 |
.115 |
12,650 |
|
6 |
1,10,000 |
0.058 |
6,380 |
|
|
|
Total |
1,10,000 |
The depreciation expense in year 1 is $22,000
