A firm is considering purchasing an asset that will cost $5 million.Other depreciable costs include $800,000 in installation costs.If the asset is classified in the 5-year class,what is the annual depreciation for years 1,3,and 6 for this asset,using the fixed depreciation percentages given by MACRS? (The percentages are 20.00%,19.20%,and 5.76%,respectively.)
A)$1,856,000,$1,113,600,and $334,080 for years 1,3,and 6,respectively
B)$1,160,000,$1,113,600,and $334,080 for years 1,3,and 6,respectively
C)$1,160,000,$1,113,600,and $668,160 for years 1,3,and 6,respectively
D)$5,800,000,$1,160,000,and $1,113,600 for years 1,3,and 6,respectively

Question

Quizplus · Accepted Answer

The depreciable basis for the asset is $5,800,000 ($5,000,000 + $800,000). 
Using the fixed depreciation percentages given by MACRS, the annual depreciation for years 1, 3, and 6 are as follows:
- Year 1: $1,160,000 (20% of $5,800,000)
- Year 3: $1,113,600 (19.2% of $5,800,000)
- Year 6: $334,080 (5.76% of $5,800,000)
Therefore, the correct choice is B.

A Firm Is Considering Purchasing an Asset That Will Cost