IMANET Exam CMA Topic 1 Question 53 Discussion

Actual exam question for IMANET's Certified Management Accountant exam

Question #: 53
Topic #: 1

[All Certified Management Accountant Questions]

The tax impact of equipment depreciation affects capital budgeting decisions. Currently, the Modified Accelerated Cost Recovery System (MACRS) is used as the depreciation method for most assets for tax purposes. The MACRS method of depreciation for assets with 3, 5. 7. and 1 0-year recovery periods is most similar to which one of the following depreciation methods used for financial reporting purposes?

AStraight-line.

BUnits-of-production.

CSum-of-the-years'-digits.

D200% declining-balance.

Show Suggested Answer

Suggested Answer: D

MACRS for assets with lives of 10 years or less is based on the 200% declining-balance method of depreciation. Thus, an asset with a 3-year life would have a straight-line rate of 33-113%. or a double- declining-balance rate of 66-2/3%.

by Chanel at Jun 19, 2022, 08:00 AM

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