Final answer:
The information not required for computing MACRS depreciation is the salvage or residual value of the asset. Instead, you would need the cost basis, depreciation method, depreciation convention, recovery period, and placement in service date.
Step-by-step explanation:
The student has asked which piece of information is not required to compute Modified Accelerated Cost Recovery System (MACRS) depreciation. To accurately calculate MACRS depreciation, you do not need to know the salvage or residual value for the asset. You will need the cost or original basis of the asset, the depreciation method chosen by the business, the depreciation convention used in the year of purchase, the recovery period for the asset, and the date the asset was placed in service.
MACRS allows the cost of assets to be recovered over a specified life by annual deductions for depreciation. It provides a larger depreciation deduction in the early years and smaller deductions later. Unlike other depreciation methods, MACRS does not consider the salvage value when calculating the annual depreciation expense
Determining the cost basis of the asset is crucial since it represents the total invested cost and serves as the starting point for depreciation. The selected depreciation method affects how quickly the cost recovery happens, with businesses often using the General Depreciation System (GDS) or the Alternative Depreciation System (ADS). The depreciation convention, such as half-year or mid-quarter, dictates when you begin depreciating the asset. Finally, the prescribed recovery period and the date when the asset is placed in service determine the timeline for the depreciation deductions.