Question

A high-precision programmable router for shaping office furniture components (office furniture manufacturing equipment) is purchased by Henredon for $350,000. It is expected to last 12 years. Calculate the depreciation deduction and book value for each year using MACRS-GDS allowances. a. What is the MACRS-GDS property class? Provide your answer in year (format example: 3 year)

Answer 1

The question involves calculating MACRS-GDS depreciation for office furniture manufacturing equipment with a lifespan of 12 years, typically classified under the 7-year property class for MACRS purposes. However, the correct classification may vary depending on the asset's specific details.

Step-by-step explanation:

The subject of this question is about calculating the depreciation deduction and book value of a programmable router purchased by Henredon for $350,000 with an expected life of 12 years using Modified Accelerated Cost Recovery System (MACRS) General Depreciation System (GDS) allowances. MACRS-GDS is a method of depreciation used for tax purposes in the United States that allows for larger depreciation deductions in the early years of an asset's life and smaller deductions later on.


As for the specific property class under MACRS-GDS for the router, office furniture generally falls into the 7-year property class. However, the student's question does not provide enough specific information about the router to definitively determine the proper class, and in the real-world, specific asset details might potentially place it under different property classifications. Please refer to the latest IRS guidelines or consult a tax professional to correctly classify the asset and compute the annual depreciation expense and book value.