Answer:
To calculate the accumulated depreciation using the MACRS method, you will need to use Table 17-1 and Table 17-2 from your textbook. Here are the steps:
1. Determine the depreciation rate for the computer system based on its class life. According to Table 17-1, the class life for computers is 5 years. According to Table 17-2, the depreciation rate for 5-year property using the 200% declining balance method (which is used in the first year) is 40%. Therefore, the depreciation rate for the computer system in year 1 is 40%.
2. Calculate the depreciation for year 1 using the depreciation rate and the cost of the asset. The depreciation for year 1 is the cost of the asset multiplied by the depreciation rate, which gives us:
Depreciation for year 1 = $49,500 x 40% = $19,800
3. Determine the depreciation rate for year 2. According to Table 17-2, the depreciation rate for 5-year property using the 200% declining balance method in year 2 is 32%. Therefore, the depreciation rate for the computer system in year 2 is 32%.
4. Calculate the depreciation for year 2 using the depreciation rate and the remaining book value of the asset. The remaining book value of the asset after year 1 is the cost of the asset minus the depreciation for year 1, which gives us:
Remaining book value after year 1 = $49,500 - $19,800 = $29,700
Depreciation for year 2 = $29,700 x 32% = $9,504
5. Determine the depreciation rate for year 3. According to Table 17-2, the depreciation rate for 5-year property using the 200% declining balance method in year 3 is 19.2%. Therefore, the depreciation rate for the computer system in year 3 is 19.2%.
6. Calculate the depreciation for year 3 using the depreciation rate and the remaining book value of the asset. The remaining book value of the asset after year 2 is the cost of the asset minus the depreciation for year 1 and year 2, which gives us:
Remaining book value after year 2 = $29,700 - $9,504 = $20,196
Depreciation for year 3 = $20,196 x 19.2% = $3,880.35