Question

Better Beverages purchased $139,700 of fixed assets that are classified as five-year MACRS property. 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 if the tax rate is 21 percent and no bonus depreciation is taken?

Answer 1

Answer:

= $115,559.84

Explanation:

The MACRS represents Modified Accelerated Cost Recovery System and it represents a depreciation method that is accepted for taxation purpose in the United States. The MACRS allows an asset's capitalized cost's recovery over a period of time based on annual deductions.

From the question, the fixed asset was purchased for $139,700

the MACRS rate to use at the end of 4 years = 0.2, 0.32, 0.192 and 0.1152

The accumulated depreciation therefore,

= (0.2+0.32+0.192+0.1152) x $139,700

= $115,559.84