Which of the following statements about the Modified Accelerated Cost Recovery System (MACRS)is correct?
A)It is similar to the units-of-production depreciation method.
B)It is applied using longer asset lives than the estimated useful lives required by GAAP.
C)It provides a short-term tax benefit because of the higher depreciation expense reported in the early years of an asset's life.
D)It is acceptable for use when preparing financial statements.

Question

Quizplus · Accepted Answer

MACRS provides a short-term tax benefit because it allows for higher depreciation expenses in the early years of an asset's life, which results in a lower taxable income and lower tax payments. However, it does not align with the estimated useful lives required by GAAP and is not acceptable for use when preparing financial statements. MACRS is also different from the units-of-production depreciation method, which bases depreciation on the actual usage of the asset rather than its age or time in service.

Which of the Following Statements About the Modified Accelerated Cost