The modified accelerated cost recovery system (MACRS)allows an increase:
A) in total depreciation over the asset's life.
B) in annual depreciation during earlier years.
C) in real but not nominal depreciation expense.
D) in the asset's depreciable cost basis.

Question

Quizplus · Accepted Answer

MACRS allows for a higher amount of depreciation to be taken in the earlier years of an asset's life, which can result in significant tax savings during those years. This is achieved through assigning the asset to a specific asset class and using a set of depreciation rates and methods to calculate the annual depreciation expense. However, the total depreciation over the asset's life remains the same. The depreciable cost basis is also not increased, as it is based on the original purchase price of the asset. Real and nominal depreciation expenses are not relevant in this context.

The Modified Accelerated Cost Recovery System (MACRS)allows an Increase