Question

Justin. han bought a new car that cost 38,200. using macrs, calculate the deprecia expense in year 3

Answer 1

To calculate depreciation expense in year 3 using MACRS, multiply the car's initial cost by the MACRS rate for year 3.

Step-by-step explanation:

In this scenario, Justin bought a new car for $38,200. To calculate the depreciation expense in year 3 using the Modified Accelerated Cost Recovery System (MACRS), we first need to determine the MACRS depreciation rates for the car's class. The MACRS depreciation rates for class automobiles are:

1. Year 1: 20%
2. Year 2: 32%
3. Year 3: 19.20%
4. Year 4: 11.52%
5. Year 5 and beyond: 5.76%

To calculate the depreciation expense in year 3, we multiply the car's initial cost by the MACRS depreciation rate for year 3:

Depreciation Expense in Year 3 = $38,200 * 19.20%

Depreciation Expense in Year 3 = $7,342.40