In the MACRS depreciation schedules,the depreciation percentage is lower in the first year than in the second year.This is due to the fact that:
A) the depreciation percentage increases each year.
B) assets are assumed to be acquired at midyear.
C) depreciation expense increases at the rate of inflation.
D) MACRS depreciation is less attractive than straight-line depreciation.

Question

Quizplus · Accepted Answer

The lower depreciation percentage in the first year of MACRS depreciation is due to the assumption that assets are acquired at midyear. This means that the asset is only used for a portion of the first year, so the depreciation expense is lower. The higher depreciation percentage in the second year is due to the full-year use of the asset.

In the MACRS Depreciation Schedules,the Depreciation Percentage Is Lower in the First