PA Petroleum

P.A. Petroleum just purchased some equipment at a cost of $67,000. The equipment is classified as MACRS five-year property. The MACRS rates are .2, .32, and .192 for Years 1 to 3, respectively. What is the proper methodology for computing the depreciation expense for Year 2 assuming the firm opts to forego any bonus depreciation?

A) $67,000(1 − .20) (.32)
B) $67,000/(1 − .20 − .32)
C) $67,000(1.32)
D) $67,000(1 − .32)
E) $67,000(.32)