Exhibit 11-05
Wilson is preparing his tax returns using the MACRS convention. The following information relates to the purchase of an asset on January 1, Year 1.
MACRS Depreciation as a Percentage of the Cost of the Asset
-Refer to Exhibit 11-05, what amount of depreciation would be recorded on the income tax returns for year 5?

Question

Exhibit 11-05
Wilson is preparing his tax returns using the MACRS convention. The following information relates to the purchase of an asset on January 1, Year 1.
MACRS Depreciation as a Percentage of the Cost of the Asset  
-Refer to Exhibit 11-05, what amount of depreciation would be recorded on the income tax returns for year 5?

Quizplus · Accepted Answer

The amount of depreciation for year 5 can be determined using the Modified Accelerated Cost Recovery System (MACRS), which is commonly used for tax purposes in the United States. The depreciation amount is calculated based on the asset's cost and its recovery period. Without the specific details from Exhibit 11-05, the correct answer typically involves applying the appropriate depreciation rate for year 5 to the asset's basis. Given the options provided and assuming the question is based on a standard depreciation scenario, the correct answer would be the one that aligns with the MACRS schedule for the asset's class life. However, without the exhibit or more context, the specific reasoning for choosing option C ($12,096) as the correct answer involves understanding that it is the amount that would be calculated based on the given options and typical depreciation schedules for year 5.

Exhibit 11-05 Wilson Is Preparing His Tax Returns Using the MACRS Convention