When employing the MACRS (modified accelerated cost recovery system) method of depreciation in a capital budgeting decision, the use of MACRS as compared to the straight-line method of depreciation will, for an asset with zero estimated salvage value at the end of its useful life, result in
A) Equal total depreciation deductions over the life of the asset.
B) MACRS producing less total depreciation than the amount determined under the straight-line method.
C) Equal total tax payments, after discounting for the time value of money.
D) MACRS producing more total depreciation than deductions based on the straight-line method.
E) MACRS producing lower annual depreciation deductions in the early years of the asset's life.

Question

Quizplus · Accepted Answer

MACRS and the straight-line method both allow for the full cost of the asset to be depreciated over its useful life, resulting in equal total depreciation deductions.

When Employing the MACRS (Modified Accelerated Cost Recovery System) Method