Get Mastering Depreciation Final Exam Answers

Under the Modified Accelerated Cost Recovery System (MACRS), the 200-percent declining balance method is used to depreciate 3-, 5-, 7-, and 10-year property and the 150-percent declining balance method is used to depreciate 15- and 20-year property ( ¶1243) ( Code Sec. 168(b)).

Accelerated depreciation methods Sum of the Years' Digits Depreciation = Depreciable Cost x (Remaining Useful Life / Sum of Years' Digits) Sum of the Years' Digits = (Useful Life x (Useful Life + 1)) / 2. Double Declining Depreciation = 2 x Straight-Line Depreciation Rate x Value at Beginning of the Year.

150% Declining Balance Method (GDS) This method accelerates the straight-line depreciation rate by 150%. Like the 200% method, this one also reverts to the straight-line depreciation when it provides a higher or equivalent deduction.

This method simply subtracts the salvage value from the cost of the asset, which is then divided by the useful life of the asset.

Here are four common methods used to calculate annual depreciation expense depending on the asset: Straight-line depreciation. ... Declining balance and double-declining balance depreciation. ... Units of production depreciation. ... Sum of years digits (SYD) depreciation.

The term depreciation refers to an accounting method used to allocate the cost of a tangible or physical asset over its useful life. Depreciation represents how much of an asset's value has been used. It allows companies to earn revenue from the assets they own by paying for them over a certain period of time.

The 150% reducing balance method divides 150 percent by the service life years. That percentage will be multiplied by the net book value of the asset to determine the depreciation amount for the year.

However, many firms use a rate equal to 1.5 times the straight-line rate. This is called 150% declining balance depreciation. 150% declining balance depreciation is calculated in the same manner as is double-declining-balance depreciation, except that the rate is 150% of the straight-line rate.