Question

Better Beverages purchased some fixed assets classified as five-year property for MACRS. The assets cost $108,000. The MACRS rates are .2, .32, .192, .1152, .1152, and .0576 for years 1 to 6, respectively. What will the accumulated depreciation be at the end of year 4?a. $101,779.20
b. $25,056.67
c. $42,002.89
d. $48,755.09
e. $89,337.60

Answer 1

Answer:

e. $89,337.60

Explanation:

Given that

The cost of the asset = $108,000

And, the MACRS rate is .2, .32, .192, .1152, .1152, and .0576 for years 1 to 6

So the accumulated depreciation at the end of the year 4 is

= ($108,000) × (0.2 + 0.32 + 0.192 + 0.1152)

= $108,000 × 0.8272

= $89,337.60

By multiplying the cost of the asset with the MACRS rate upto fourth year we can get the accumulated depreciation