Question

When compared to the straight-line depreciation method, MACRS has:

A) a greater proportion of its depreciation early in the life of the asset.
B) a lesser proportion of its depreciation early in the life of the asset.
C) an equal proportion of its depreciation early in the life of the asset.
D) None of the above.

Answer 1

MACRS has a greater proportion of its depreciation early in the life of the asset compared to the straight-line depreciation method.

Step-by-step explanation:

MACRS stands for Modified Accelerated Cost Recovery System, which is a method used for depreciating assets for tax purposes.

When compared to the straight-line depreciation method, MACRS has a greater proportion of its depreciation early in the life of the asset.

This means that the asset is depreciated more quickly in the beginning years of its life and less quickly in the later years.

For example, under MACRS, a car may be depreciated more in the first few years and then less in the following years, whereas under straight-line depreciation, the car would be depreciated evenly over its entire useful life.