Question

An asset is in the MACRS 5-year property class and is being depreciated using the MACRS tables. The tax rate is 30%. The depreciation deduction for this asset in year 2 totaled $12,800. Calculate the depreciation deduction for this asset in year 4. You will need to use the percentages from the MACRS tables posted in carmen to answer this question. To access these percentages, click modules and then scroll to weeks 13 & 14. Click on the link labeled MACRS table percentages.

Answer 1

solution:

given that

an asset in the MACRS 5 years property class and is being depreciated using the MACRS tables.

also given

The tax rate is 30%.

given depreciation deduction for this asset in year 2 totaled $12,800

Calculating the depreciation deduction for this asset in year 4:

we have from given data

2nd year Depreciation = $12,800

from macrs table

2nd year Depreciation rate for the 5 year class asset = 32%
therefore

Cost of the asset = $12,800 / 32%
= $40000

now
4th year Depreciation = $40,000 * 11.52% = $4,608