The Modified Accelerated Cost Recovery System (MACRS)is Often Used by Companies

question 54

Multiple Choice

The Modified Accelerated Cost Recovery System (MACRS) is often used by companies to calculate depreciation expense for tax purposes. Which of the following is most correct?

• A)MACRS allows greater tax deductions related to depreciation earlier in the life of an asset than straight line depreciation does.
• B)MACRS uses the half-year convention in calculating depreciation expense.
• C)MACRS always depreciates the value of an asset down to zero (as opposed to a salvage value)if the asset is held long enough by the company.
• D)Even though depreciation is a non-cash expense, the use of MACRS can improve the profitability of a project as compared to the same project using straight line depreciation.
• E)All of the above are correct.

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Definitions:

Clothes-Changing Time

The duration employees spend changing into work-specific clothes or uniforms, often discussed in context of compensation.

On-Site Physical Facilities

Physical resources and infrastructure located at the business premises, such as buildings and equipment.

Wash-Up Time

The time allowed during a work period for employees to clean themselves and their equipment after performing dirty work.

Tax Regulations

Rules and laws governing how taxes are imposed, collected, and regulated by governments.