Derive the MACRS-GDS percentage for the 5 year property as given in the table be

Question

Derive the MACRS-GDS percentage for the 5 year property as given in the table below. Keep in mind the switch from DB to SLN

TABLE 8.3 MACRS-GDS percentages for 3-, 5-, 7-, and 10-year property are 200% DBLH and 15-and 20-year property are 150% DBSLH 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year EOY Property Property Property Property Property Property 3.750 7.219 6.677 10.00 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.56 6.55 3.28 5.00 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 20.00 32.00 19.20 11.52 11.52 5.76 14.29 24.49 17.49 12.49 8.93 8.92 8.93 4.46 2 3 4 5 33.33 44.45 14.81 7.41 5.713 5.285 4.888 4.522 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 7 10 12 13 15 16 17 18 19 20 21

Explanation / Answer

Since the MACRS-GDS is for a 5 year property thus, using the table the following rate shall be used on the cost basis of the asset to determine the depreciation on year 1 to 5.

Year

MACRS-GDS percentage

1

20%

2

32%

3

19.20%

4

11.52%

5

11.52%

Year

MACRS-GDS percentage

1

20%

2

32%

3

19.20%

4

11.52%

5

11.52%

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