Question

Data, Inc., purchased and placed in service a $5,000 computer on August 24, year 3. This is the only asset purchase during the year. Section 179 expensing and bonus depreciation were not elected. Using the excerpt of the MACRS half-year convention table below, what is the MACRS depreciation in year 3 for the computer?

a.$500
b.$715
c.$960
d.$1,000

Answer 1

The MACRS depreciation in year 3 for the computer is $1,000. Option d. is correct answer.

Step-by-step explanation:

To calculate the MACRS depreciation for the computer in year 3, we need to determine the applicable depreciation rate from the MACRS half-year convention table and multiply it by the cost of the computer. Based on the information provided, the computer was purchased and placed in service on August 24, year 3.

Since it is the only asset purchase during the year, we can assume it has not been used prior to that date.

Looking at the MACRS half-year convention table, the depreciation rate for a 5-year property in year 3 is 20%. Therefore, the MACRS depreciation in year 3 for the computer would be 20% of $5,000, which is $1,000.