Question

A depreciation method that allocates depreciation of a plant asset based on the Tax Act of 1989 is the ______ method.

Answer 1

Answer: MACRS

Step-by-step explanation:

This is the Modified Accelerated Cost Recovery System of Depreciation (MACRS) is used as per the tax system in US. Through annual deductions the capitalized cost of the asset can be recovered. Here the fixed assets have depreciation periods which is used in calculations they are differentiated based on the asset class.

IRS has a detailed version of the assets life span details and provides which assets are eligible for MACRS system. This is the depreciation method according to tax act of 1989.