2024 – Dawes Company is contemplating whether to use MACRS depreciation or straight line depreciation for a plant
Managerial Accounting Exam – Need it done in 1.5 hours – 2024
Dawes Company is contemplating whether to use MACRS depreciation or straight-line depreciation for a plant asset. The following information is available:
| MACRS | Straight-line | Present Value of | |
| Depreciation | Depreciation | $1 at 12% | |
| Year 1 | $15,984 | $12,000 | 0.8929 |
| Year 2 | $21,360 | $12,000 | 0.7972 |
| Year 3 | $7,104 | $12,000 | 0.7118 |
| Year 4 | $3,552 | $12,000 | 0.6355 |
Over the four years examined, how much did Dawes Company gain by using MACRS depreciation instead of straight-line depreciation for the plant asset? The tax rate is 35%. (Find the present value).
| [removed] | A. |
$11,019 |
| [removed] | B. |
$2,165 |
| [removed] | C. |
$3,557 |
| [removed] | D. |
$758
|
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