Suppose that a project has a depreciable investment of $600,000 and falls under the following MACRS year 5 class depreciation schedule:
Year 1: 20%; year 2: 32%; year 3: 19.2%; year 4: 11.5%; year 5: 11.5%; and year 6: 5.8%.
Calculate depreciation for year 2.
A)$120,000
B)$192,000
C)$96,000
D)$115,200

Question

Quizplus · Accepted Answer

To calculate the depreciation for year 2, first we need to determine the depreciation basis for that year. To do this, we take the original investment of $600,000 and multiply it by the percentage applicable for year 2 (32%).

$600,000 x 0.32 = $192,000

Therefore, the depreciation for year 2 is $192,000. Answer choice B is correct.

Suppose That a Project Has a Depreciable Investment of $600,000