A farm tractor costing $80,000 is depreciated using the MACRS method. The tractor qualifies as a 3-year property, has a scrap value of $20,000, and is depreciated at the following rates: Year 1, 33.33%; Year 2, 44.45%; Year 3, 14.81%; and Year 4, 7.41%. The amount of depreciation to be entered for the second year would be
A) $20,000.
B) $26,670.
C) $35,560.
D) $44,450.

Question

Quizplus · Accepted Answer

The depreciation for the second year is calculated by multiplying the cost of the tractor ($80,000) by the second-year depreciation rate (44.45%), which equals $35,560.

A Farm Tractor Costing $80,000 Is Depreciated Using the MACRS