Indicate whether each of the following statements is true or false.________ a) MACRS is an accelerated depreciation method commonly used for tax purposes.________ b) The half-year convention is a semiannual meeting of accountants and educators.________ c) MACRS requires that the taxpayer estimate the salvage value of assets.________ d) The use of MACRS provides tax benefits in the early years of an asset's life, compared to use of the straight-line method.________ e) Most companies use the same depreciation method for both financial reporting and tax reporting.

Question

What will be an ideal response?

Answer 1

a) T b) F c) F d) T e) F

a) This is true. MACRS is the accelerated depreciation method most companies use for income tax purposes.
b) This is false. The half-year convention refers to the practice of calculating depreciation in the asset's first year as if it had been purchased at mid-year, regardless of when the purchase was actually made.
c) This is false. Salvage values are not used in MACRS depreciation.
d) This is true. MACRS is an accelerated depreciation method that assigns greater depreciation expense in an asset's early life, resulting in lower income tax expense.
e) This is false. Most U.S. companies use the straight-line method for financial reporting and MACRS depreciation for tax reporting.