Question

11 On july 15, 2016, Maxwell Syndicated purchases a new assembly line for $75,000. The useful life is six years and the residual value is $3,000. The assembly line is considered a seven-year recovery asset. What is Maxwell's MACRS depreciation for Year One, assuming Man el takes the 50% bonus depreciation and does not elect to take a section 179 deduction? For MACRS rates, use the following table: TABLE1. Equipment (partial IRS table) (Half-Year Convention, 200% Declining Balance) Year 3-year 333390 5-year 7-year 20 00% 32 00% 1920% 11 52% 11 52% 576% 2449% 17 49% 1249% 93% 8 92% 93% 4 46% 100% 14 81% 741% Total Depreciation 100% A $5,359 В $10,718 С $37,500 D $75,000

Answer 1

Answe: B ($1078)

Explanation:

In the given case, we are given the following data:

Purchase price of asset = $ 75,000

Recovery life = 7 years

Note: In case of MACRS Depreciation, Salvage value is of no importance because every asset is always written down to zero value.

Thus, referring to the above table, depreciation of an asset having an economic life of 7 years in the first year = 14.29%

Therefore, depriciation in year 1 =  Purchase price of asset * Rate given above

= $ 75,000* 14.29%

= $ 10,718