Question

the swift corporation recently purchased an asset for $1,850,000 that will be used in a 3-year project. the asset is in the 4-year macrs class. the depreciation percentage each year is 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. what is the depreciation expense in year 2?

Answer 1

The depreciation expense for the Swift Corporation's asset in year 2, using the 4-year MACRS class is $822,825, calculated by multiplying the asset's cost of $1,850,000 by the 44.45% depreciation rate for the second year.

Step-by-step explanation:

The question concerns the calculation of depreciation expense for the second year of an asset's use, under the MACRS (Modified Accelerated Cost Recovery System) method. The Swift Corporation purchased an asset for $1,850,000 that falls under the 4-year MACRS class. The depreciation rate for the second year is given as 44.45%. Therefore, the depreciation expense for year 2 can be calculated by multiplying the initial cost of the asset by the given percentage for the second year.

Depreciation Expense for Year 2 = Initial Cost of Asset × Depreciation Rate for Year 2

Depreciation Expense for Year 2 = $1,850,000 × 44.45%

Depreciation Expense for Year 2 = $822,825