Which of the Following Is True About the MACRS Depreciation

question 54

Multiple Choice

Which of the following is true about the MACRS depreciation system?

• A)No salvage value is used before depreciation percentages are applied to depreciable real estate.
• B)Residential rental buildings are depreciated straight-line over 20 years.
• C)Commercial real estate buildings are depreciated over 39 years using accelerated depreciation.
• D)No matter when equipment is purchased during the month, it is considered to have been purchased mid-month for MACRS depreciation purposes.

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Definitions:

Land Improvements

Enhancements to a piece of land to increase its value or usability, such as landscaping, fencing, and adding utilities, which are subject to depreciation.

Useful Life

The estimated period over which an asset is expected to be used by an entity before it is replaced or becomes obsolete.

Depreciated

The decrease in the value of an asset over time due to wear and tear or obsolescence.

Modified Accelerated Cost Recovery System

A method of depreciation in the U.S. tax code that allows for faster asset depreciation in the early years of the asset's life.