Find the book value using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
-Cost: $190,000
Recovery Period: 5-year
After: Third year

Question

Find the book value using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar. 
-Cost: $190,000
Recovery Period: 5-year
After: Third year

Quizplus · Accepted Answer

The correct answer is calculated using the Modified Accelerated Cost Recovery System (MACRS), which is a method of depreciation for tax purposes in the United States. For a 5-year recovery period, the MACRS depreciation percentages for the first three years are 20%, 32%, and 19.2% respectively. The total depreciation after three years is the sum of these percentages applied to the cost. Thus, for a $190,000 asset, the total depreciation after three years is: $190,000 * (20% + 32% + 19.2%) = $190,000 * 71.2% = $135,280. The remaining value (cost - accumulated depreciation) is $190,000 - $135,280 = $54,720.

Find the Book Value Using the MACRS Method of Depreciation