Under the Modified Accelerated Cost Recovery System (MACRS) depreciation method, the salvage value is
A) added to the cost of the asset.
B) ignored.
C) subtracted from the cost of the asset.
D) added to the straight-line depreciation.

Question

Quizplus · Accepted Answer

Under the MACRS method, the salvage value of an asset is not used in the calculation of the depreciation expense. This is because the MACRS method assumes that the salvage value is zero, or negligible, and that the asset will be fully depreciated by the end of its useful life. Therefore, the salvage value is not added to or subtracted from the cost of the asset, nor is it added to the straight-line depreciation.

Under the Modified Accelerated Cost Recovery System (MACRS) Depreciation Method