Question

The salvage value is not considered when using Modified Accelerated Cost Recovery System (MACRS) depreciation methods. A. True B. False

Answer 1

Answer:

A. True

Explanation:

The Modified Accelerated Cost Recovery System (MACRS) can be defined as a depreciation system that avails business owners or companies the ability and opportunity to recover or recoup the cost basis of physical assets that have experienced deterioration over a specific period of time.

Depreciation can be defined as the reduction of cost of a fixed asset systematically until the value of the asset becomes zero.

In the United States of America, the Modified Accelerated Cost Recovery System (MACRS) is used mainly for tax purposes because it gives room for faster depreciation of a physical asset in its first years or initial usage and reduces depreciation as it is being used over a long period of time.

The salvage value is not considered when using Modified Accelerated Cost Recovery System (MACRS) depreciation methods.