Find the first year's depreciation using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar.
-Cost: $402,500
Period: 27.5-year

Question

Find the first year's depreciation using the MACRS method of depreciation and the MACRS depreciation rates table. Round to the nearest dollar. 
-Cost: $402,500
Period: 27.5-year

Quizplus · Accepted Answer

We need to use the MACRS depreciation rates table for residential rental property with a 27.5-year period. According to the table, the depreciation rate for year 1 is 3.636%. Therefore, the first year's depreciation would be:
$402,500 x 3.636% = $14,626.25
Rounded to the nearest dollar, the answer is $14,627. Therefore, the best choice is B ($14,027) as it is the closest rounded value to the calculated value.

Find the First Year's Depreciation Using the MACRS Method of Depreciation