&inprogress=false eBook Print tem Modified Accelerated Cost Recovery System An example of a depreciation schedule under the Modified Accelerated Cost Recovery System of depreciation is shown. The Internal Revenue Service (IRS) classifies various assets according to useful life and sets depreciation rates for each year of the asset's life. This asset has a five year life. The MACRS rates are shown in the schedule. This example is for an asset with a cost of $40,000 and a salvage value of $4,000. MODIFIED ACCELERATED COST RECOVERY SYSTEM Accumulated Depreciation Depreciation Book Value Year Cost x Rate = Expense (End of Year) (End of Year) 1 $40,000 20.00% $8,000 $8,000 $32,000 2 40,000 32.00% 12,800 20,800 19,200 3 40,000 19.20% 7,680 28,480 11,520 4 40,000 11.52% 4,608 33,088 6,912 5 40,000 11.52% 4,608 37,696 6 40,000 5.76% 2,304 40,000 2,304 0 Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the Modified Accelerated Cost Recovery System for a small delivery truck purchased on January 1 at a cost of $25,000 and salvage value of $5,000. For tax purposes, assume that the truck has a useful life of five years. Use the rates from the example provided. (The IRS schedule will spread depreciation over six years.) Small Delivery Truck Depreciation Schedule On January 1 Accumulated Year Cost x Rate (%) = Expense Depreciation Depreciation Book Value End of Year End of Year 1 2 Updat 12,800 20,800 19,200 3 40,000 19.20% 7,680 28,480 11,520 4 40,000 11.52% 4,608 33,088 6,912 5 40,000 11.52% 4,608 37,696 2,304 6 40,000 5.76% 2,304 40,000 Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the Modified Accelerated Cost Recovery System for a small delivery truck purchased on January 1 at a cost of $25,000 and salvage value of $5,000. For tax purposes, assume that the truck has a useful life of five years. Use the rates from the example provided. (The IRS schedule will spread depreciation over six years.) Small Delivery Truck Depreciation Schedule On January 1 Accumulated Depreciation Depreciation Book Value Year Cost x Rate (%) = Expense End of Year End of Year 1 2 3 4 5 6