On January 1, 2025, Pharoah Company purchased a machine costing $356000. The machine is in the MACRS 5-year recoveryclass for tax purposes and has an estimated $71000 salvage value at the end of its economic life. Assuming the company usesthe general MACRS approach, the MACRS deduction for tax purposes for the year 2025 isRecoveryYear1234567891011121314MACRS Depreciation Rates By Class of Property10-Year(200% DB)3-Year 5-Year 7-Year(200% DB) (200% DB) (200% DB)33.3344.4514.81*7.4120.0032.0019.2011.52*5.7614.2924.4917.4912.498.93*8.928.934.4610.0018.0014.4011.529.227.376.55*6.556.566.553.2815-Year(150% DB)5.009.508.557.706.936.235.90*5.905.915.905.915.905.915.9020-Year(150% DB)3.7507.2196.6776.1775.7135.2854.8884.5224.462*4.4614.4624.4614.4624.461SUPPORT O $71200.O $142400.O $113920.O $57000.*Switch to straight-line depreciation.

MACRS (Modified Accelerated Cost Recovery System) is a method of calculating depreciation in which the capitalized cost of a tangible asset is recovered over a life of the asset by annual depreciation for depreciation.Cost of a Asset = $356,000Salvage Value = $71,000Life of an asset = 5 years MACRS depreciation for the year 2020 = Cost x Rate of depreciation Annual Depreciation for the year 2020 = Cost of asset x 20% = $356,000 x 20% = $ 71,200In order to calculate annual depreciation, we have to multiply the rate of depreciation as given in the MACRS chart with the cost of an asset. In the given question since the asset has a life of 5 years, then the rate of depreciation will prevail according to the rate of depreciation as given in 5years column. So, the correct answer is part (1)So, the correct answer is part (1)

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On January 1, 2025, Pharoah Company purchased a machine costing $356000. The machine is in the MACRS 5-year recovery class for tax purposes and has an estimated $71000 salvage value at the end of its economic life. Assuming the company uses the general MACRS approach, the MACRS deduction for tax purposes for the year 2025 is

On January 1, 2025, Pharoah Company purchased a machine costing $356000. The machine is in the MACRS 5-year recovery class for tax purposes and has an estimated $71000 salvage value at the end of its economic life. Assuming the company uses the general MACRS approach, the MACRS deduction for tax purposes for the year 2025 is

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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