MACRS Table Daily

yearly depreciation = yearly depreciation percentage * cost 

depreciation for each period = 
yearly depreciation amount * (days in period / days in tax year) 

Example of MACRS Table Daily

• Year One

Your company uses a conveyor with a cost of $10,000, a life of five years, and a in-service date of 1/1/2002. Management decides to depreciate it under the MACRS 200% declining balance method with a half year averaging convention. LN uses the rate tables to determine the percentage used in calculating the annual percentage in each year.

In the first year, the rate is 20% and LN calculates depreciation as follows:

(20% * $10,000) = $2,000 

LN then calculates the depreciation expense for each period in that year according to how many days were in each period. In the first period of the asset's life there were only 25 days, so LN performs the following calculation for that period:

$2,000 * (25 / 365) = $136.99

In the second period of the first year, there were 31 days. LN calculates depreciation as follows:

$2,000 * ( 31/365) = $169.86

LN records a depreciation expense of $136.99 in the first period of year one, and an expense of $169.86 in the second period. If an asset is placed in service at any time other than the first day of the tax year, LN substitutes the number of days from the in-service date to the end of the tax year for the number 365 in the calculations listed above.

For example, if the asset were placed in service on November 6, 2002, LN calculates that there were only 56 days in the first tax year. LN would use 25/56 in the first calculation and 31/56 in the second calculation.

• Year Two

For the second year, LN uses the rate tables to determine that the rate for this year should be 32%. LN calculates the yearly depreciation expense as follows:

(32% * $10,000) = $3,200 

The first period in year two has 31 days, so LN calculates depreciation for the period as follows:

$3,200 * (31 / 365) = $271.78