When comparing a five year straight-line depreciation schedule and a five year MACRS depreciation schedule, at what point in time does the straight-line depreciation cost exceed the MACRS depreciation cost?
A)After the second year, but not after the fifth year
B)Only during the third year
C)After the fourth year and through the sixth year
D)Only during the fifth year

Question

Quizplus · Accepted Answer

The straight-line depreciation method spreads the cost evenly over the asset's useful life, while MACRS front-loads depreciation, allowing for greater depreciation expenses in the early years. Therefore, straight-line depreciation cost exceeds MACRS depreciation cost after the second year, as MACRS' accelerated depreciation decreases over time.

When Comparing a Five Year Straight-Line Depreciation Schedule and a Five