Question

Data. Inc purchased and placed in service $5,000 o office furniture on August 24, year 3. This is the only asset purchased during the year. Sec. 179 expensing was not elected. Using the excerpt of the MACRS half-year convention table below, what is the MACRS depreciation in year 3 for the office furniture? Recover Period 5-Year 7-Year 10-Year 1 20% 14.29% 10% 2 32% 24.49% 18% 3 19.2% 17.49% 14.4% a. $500 b. $715 c. $875 d. $1,000

Answer 1

The MACRS depreciation for the office furniture in year 3 for Data, Inc. is $1,000, calculated by multiplying the cost of the furniture, $5,000, by the first year's depreciation rate of 20% according to the MACRS table for a 5-Year recovery period.

Step-by-step explanation:

The student is asking for the calculation of the MACRS depreciation for office furniture purchased by Data, Inc., under a half-year convention without electing Sec. 179 expensing. Since the office furniture falls under the 5-Year recovery period and the furniture was put into service in year 3, we will be using the first year's percentage for the depreciation calculation from the provided MACRS table. According to the table, the depreciation rate for the first year of a 5-year property is 20%.

To calculate the MACRS depreciation for the office furniture in year 3, you would take the cost of the furniture, $5,000, and multiply it by the first year's depreciation rate:

Depreciation expense = Cost of the asset × Depreciation rate

Depreciation expense = $5,000 × 20%

Depreciation expense = $5,000 × 0.20

Depreciation expense = $1,000

Therefore, the MACRS depreciation for the office furniture in year 3 for Data, Inc. would be $1,000, which corresponds to option d.