Refer to Exhibit 12.6 in the text.

What is the depreciation expense deduction in each of four years for a $10,000 asset classified under MACRS as three-yearproperty?

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Class 3-year property 5-year property 7-year property Depreciation Method Example 200% declining balance Light tools and handling equipment 200% declining balance Computers and peripheral equipment, office machinery automobiles, light trucks 200% declining balance Office furniture, appliances, carpet, and furniture in residential rental property and any asset that does not have an assigned class 10-year property 200% declining balance Manufacturing assets for food products, petroleum refining, tobacco 15-year property 150% declining balance Road and shrubbery, telephone distribution plant 20-year property 150% declining balance Multipurpose farm structures 27.5 year property Straight line 31.5 year property Straight line Residential rental property Nonresidential real property, office building, warehouse