Question

A project requires $428,000 of equipment that is classified as seven-year property. What is the depreciation expense in Year 3 given the following MACRS depreciation allowances, starting with Year 1: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent?
A)$56,038.15
B)$89,038.42
C)$74,857.20
D)$104,817.20
E)$48,447.30

Answer 1

Answer:

C)$74,857.20

Explanation:

The computation of the depreciation expense in year 3 is shown below:

= Required equipment amount × MACRS depreciation allowances in year 3

= $428,000 × 17.49%

= $74,857.20

Simply we multiply the equipment amount with its depreciation allowance of year 3 so that the correct amount can be computed.

All other information which is given is not relevant. Hence, ignored it