Federal Express bought material handling equipment for its hub operations that cost $180,000. Using the MACRS, what is the depreciation expense in year 3 (using a five-year class)?
A)$15,360
B)$40,000
C)$43,560
D)$34,560
E)None of these

Question

Quizplus · Accepted Answer

Using the MACRS depreciation method for a five-year class, the depreciation rates are:

Year 1: 20.00%
Year 2: 32.00%
Year 3: 19.20%
Year 4: 11.52%
Year 5: 11.52%
 
To calculate the depreciation expense for year 3, we multiply the cost of the equipment by the year 3 depreciation rate:

$180,000 * 19.20% = $34,560

Therefore, the depreciation expense in year 3 is $34,560. Option D is the correct answer.

Federal Express Bought Material Handling Equipment for Its Hub Operations