Gregory Corporation,a calendar-year corporation,purchased an office building in March of year 1.In September of year 17,it sold the building.What factor must be applied to the MACRS percentage to determine the year 17 depreciation?
A)3/12
B)7.5/12
C)8.5/12
D)9/12

Question

Quizplus · Accepted Answer

MACRS depreciation is calculated based on the assumption that the asset is owned for the entire year. Therefore, to calculate the depreciation for a partial year, the percentage is multiplied by the fraction of the year that the asset was owned. Since Gregory Corporation sold the building in September of year 17, it owned the building for 7.5/12 (or 5/8) of the year. Therefore, the factor that must be applied to the MACRS percentage is 7.5/12 (or 5/8). Choice B, 7.5/12, is the correct answer.

Gregory Corporation,a Calendar-Year Corporation,purchased an Office Building in March of Year