Atlas Manufacturing purchased a new computer system in 2018 at a cost of $622,400. This system falls in the 5-year MACRS class that has depreciation allowance percentages of 20, 32, 19.2, 11.52, 11.52, and 5.76. What is the maximum amount of depreciation the firm can claim on this system in the first year if it selects the bonus depreciation method?
A) $311,200
B) $124,480
C) $199,168
D) $622,400
E) $155,600

Question

Quizplus · Accepted Answer

Under the bonus depreciation method, a business can immediately deduct 100% of the cost of eligible assets in the year they are placed in service. Since the computer system was purchased in 2018 and assuming it qualifies for bonus depreciation, Atlas Manufacturing can claim the entire cost of $622,400 as depreciation in the first year.

Atlas Manufacturing Purchased a New Computer System in 2018 at a Cost