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A wood products company has decided to purchase new logging equipment for $104,000. The new equipment will be kept for 12 years before being sold for an estimated SV of $3,000. Using MACRS depreciation (7 year recovery period), the depreciation charge permissible at year 6 is equal to?

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Answer: $9,276.80

Explanation:

The Modified Accelerated Cost Recovery System (MACRS) is a depreciation method used by the United States for depreciation of fixed assets for tax purposes. There are different recovery period term types and the 7 year recovery period is attached here.

The depreciation charge for year 6 is: 8.92%

Depreciation charge is therefore:

= 104,000 * 8.92%

= $9,276.80

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