Question

Nash Corporation purchased an asset at a cost of $40,000 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $3,200. For tax purposes, the MACRS class life is 5 years.

MACRS Depreciation Rates by Class of Property
Recovery Year		3-year   (200% DB)		5-year (200% DB)		7-year (200% DB)		10-year (200% DB)		15-year (150% DB)		20-year (150% DB)
1		33.33		20.00		14.29		10.00		5.00		3.750
2		44.45		32.00		24.29		18.00		9.50		7.219
3		14.81*		19.20		17.49		14.40		8.55		6.677
4		7.41		11.52*		12.49		11.52		7.70		6.177
5				11.52		8.93*		9.22		6.93		5.713
6				5.76		8.92		7.37		6.23		5.285
7						8.93		6.55*		5.90*		4.888
8						4.46		6.55		5.90		4.522
9								6.56		5.91		4.462*
10								6.55		5.90		4.461
11								3.28		5.91		4.462
12										5.90		4.461
13										5.91		4.462
14										5.90		4.461
15										5.91		4.462
16										2.95		4.461
17												4.462
18												4.461
19												4.462
20												4.461
21												2.231
	*Switchover to straight-line depreciation.

Compute tax depreciation for each year 2020–2025. (Round answers to 0 decimal places, e.g. 45,892.)

Tax depreciation for 2020		$enter a dollar amount rounded to 0 decimal places
Tax depreciation for 2021		$enter a dollar amount rounded to 0 decimal places
Tax depreciation for 2022		$enter a dollar amount rounded to 0 decimal places
Tax depreciation for 2023		$enter a dollar amount rounded to 0 decimal places
Tax depreciation for 2024		$enter a dollar amount rounded to 0 decimal places
Tax depreciation for 2025		$enter a dollar amount rounded to 0 decimal places

Answer 1

Based on the information available in the question, we can calculate the depreciation expense as follows:-

Year	Cost of the asset	MACRS Depreciation Rate	MACRS Tax Depreciation
1	40,000	20.00%	8,000
2	40,000	32.00%	12,800
3	40,000	19.20%	7,680
4	40,000	11.52%	4,608
5	40,000	11.52%	4,608
6	40,000	5.76%	2,304
	Total MACRS Depreciation		40,000

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