Question

Lee's Furniture just purchased $24,000 of fixed assets that are classified as 5-year MACRS property. The MACRS rates are 20 percent, 32 percent, 19.2 percent, 11.52 percent, 11.52 percent, and 5.76 percent for Years 1 to 6, respectively. What is the amount of the depreciation expense for the third year if the firm applies the new bonus method of depreciation?

Answer 1

Answer: Depreciation expense for the third year if company applies the new bonus method of depreciation is $4608.

Explanation:

Using the IRS MACRS rate in percentage given in the question, we can calculate the depreciation expense for the third year.

Cost of asset is $24000

MACRS for the third year is given as 19.2% in the question.

Therefore, we can calculate thus For the third year:

19.2% × $24000 = $4608.

NOTE; The same method can also be used to calculate the depreciation expense for first, second, fourth. Fifth and sixth years respectively.