The first and last years of MACRS depreciation deductions for a 5-year asset costing $10,000 using the half-year convention are:
A)$2,000 and $2,000
B)$2,000 and $1,152
C)$2,000 and $576
D)$2,000 and $1,000

Question

Quizplus · Accepted Answer

The MACRS system uses a half-year convention for the first and last years of depreciation. For a 5-year asset, the first year's depreciation is 20% of the cost, which is $2,000. The last year's depreciation is the same as the second to last year due to the half-year convention, which is $576 (11.52% of $10,000 in the fourth year, halved for the fifth year).

The First and Last Years of MACRS Depreciation Deductions for a 5-Year