The modified accelerated cost recovery system (MACRS)allows an increase:
A) in total depreciation over the asset's life.
B) in annual depreciation during earlier years.
C) in real but not nominal depreciation expense.
D) in the number of years in each recovery class.

Question

Quizplus · Accepted Answer

MACRS allows for a higher depreciation expense during earlier years, which results in a lower taxable income and thus lower taxes in those years. This is known as accelerated depreciation. However, the total depreciation over an asset's life remains the same, so option A is incorrect. Option C is also incorrect as MACRS is a nominal depreciation expense. Option D is incorrect as the number of years in each recovery class is set by the IRS and does not change under MACRS.

The Modified Accelerated Cost Recovery System (MACRS)allows an Increase