Modified Accelerated Cost Recovery System An example of a depreciation schedule under the Modified Accelerated Cost Recovery System of depreciation is shown. The Internal Revenue Service (IRS) classifies various assets according to useful life and sets depreciation rates for each year of the asset’s life. This asset has a five year life. The MACRS rates are shown in the schedule. This example is for an asset with a cost of $40,000 and a salvage value of $4,000. MODIFIED ACCELERATED COST RECOVERY SYSTEM Year Cost × Rate = Depreciation Expense Accumulated Depreciation (End of Year) Book Value (End of Year) 1 $40,000 20.00% $8,000 $8,000 $32,000 2 40,000 32.00% 12,800 20,800 19,200 3 40,000 19.20% 7,680 28,480 11,520 4 40,000 11.52% 4,608 33,088 6,912 5 40,000 11.52% 4,608 37,696 2,304 6 40,000 5.76% 2,304 40,000 0 Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the Modified Accelerated Cost Recovery System for a computer with a cost of $5,000 and a salvage value of $500. For tax purposes, assume that the computer has a useful life of five years. (The IRS schedule will spread depreciation over six years.) Computer Depreciation Schedule On January 1

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Modified Accelerated Cost Recovery System

An example of a depreciation schedule under the Modified Accelerated Cost Recovery System of depreciation is shown. The Internal Revenue Service (IRS) classifies various assets according to useful life and sets depreciation rates for each year of the asset’s life. This asset has a five year life. The MACRS rates are shown in the schedule. This example is for an asset with a cost of $40,000 and a salvage value of $4,000.

MODIFIED ACCELERATED COST RECOVERY SYSTEM
Year	Cost	×	Rate	=	Depreciation Expense	Accumulated Depreciation (End of Year)	Book Value (End of Year)
1	$40,000		20.00%		$8,000	$8,000	$32,000
2	40,000		32.00%		12,800	20,800	19,200
3	40,000		19.20%		7,680	28,480	11,520
4	40,000		11.52%		4,608	33,088	6,912
5	40,000		11.52%		4,608	37,696	2,304
6	40,000		5.76%		2,304	40,000	0

Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the Modified Accelerated Cost Recovery System for a computer with a cost of $5,000 and a salvage value of $500. For tax purposes, assume that the computer has a useful life of five years. (The IRS schedule will spread depreciation over six years.)

Computer

Depreciation Schedule

On January 1

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Chapter 5 Appendix Homework
еВook
3
40,000
19.20%
7,680
28,480
11,520
1. EX.05APX.01B
4
40,000
11.52%
4,608
33,088
6,912
40,000
11.52%
4,608
37,696
2,304
2. EX.05AРХ.02B
40,000
5.76%
2,304
40,000
3. EX.05APX.03B
Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the Modified
Accelerated Cost Recovery System for a computer with a cost of $5,000 and a salvage value of $500. For tax purposes, assume that the computer has a
4. EX.05AРХ.04B
useful life of five years. (The IRS schedule will spread depreciation over six years.)
Computer
Depreciation Schedule
On January 1
Accumulated
Depreciation Depreciation
End of Year
Book Value
Year
Cost
Rate (%)
Expense
End of Year
34,500 X
20 V
6,900 x $ 6,900 x
$ 27,600 x
1
2
34,500 X
32 V
11,040 X
15,600 X
14,400 X
3
19.20 V
4
11.52 V
11.52 V
6.
5.76 V
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> Straight-Line Dep x
* CengageNOWv2 x
b Answered: Year C X
b Sue Jantz started X
b Register for bartle x
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Chapter 5 Appendix Homework
O eBook
Modified Accelerated Cost Recovery System
(?
1. EX.05APX.01B
An example of a depreciation schedule under the Modified Accelerated Cost Recovery System of depreciation is shown. The Internal Revenue Service
2. EX.05AРХ.02B
(IRS) classifies various assets according to useful life and sets depreciation rates for each year of the asset's life. This asset has a five year life. The
MACRS rates are shown in the schedule. This example is for an asset with a cost of $40,000 and a salvage value of $4,000.
3. EX.05АРХ.03В
4. EX.05APХ.04B
MODIFIED ACCELERATED COST RECOVERY SYSTEM
Accumulated
Depreciation Depreciation Book Value
Year
Cost
Rate
Expense
(End of Year) (End of Year)
$40,000
20.00%
$8,000
$8,000
$32,000
40,000
32.00%
12,800
20,800
19,200
40,000
19.20%
7,680
28,480
11,520
40,000
11.52%
4,608
33,088
6,912
40,000
11.52%
4,608
37,696
2,304
6.
40,000
5.76%
2,304
40,000
Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the Modified
Accelerated Cost Recovery System for a computer with a cost of $5,000 and a salvage value of $500. For tax purposes, assume that the computer has a
useful life of five years. (The IRS schedule will spread depreciation over six years.)
Computer
Depreciation Schedule
On January 1
Accumulatod
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