Modified Accelerated Cost Recovery depreciation

Property other than buildings (18-year property) placed into service at the present time must use the modified accelerated cost recovery system (MACRS) in calculating depreciation. Property is classified as having 3, 5, 7, 10, 15, or 20 years life. Some examples are ... 

The current methods for determining aimual depreciation charges are the straight-line depreciation and the Modified Accelerated Cost Recovery System (MACRS). In the straight-line method, the cost of an asset is distributed over its expected useful life such that the annual charge is... 

The various products are classified into 3-, 5-, 7-, 10-, 15- and 20-year groups in the modified accelerated cost recovery system (MACRs) in the US in 1986. The annual depreciation prescribed by the MACR system is given in Table 5.2. Some typical products belonging to various classes are noted in Table 5.3. 

Table 5.2 Annual depreciation prescribed by modified accelerated cost recovery...

The relationship of present worth as applied in the context of modified accelerated cost recovery method of depreciation may be written as ... 

Corrosion economics and corrosion management forms the theme of the fifth chapter. Discounted cash flow calculations, depreciation, the declining balance method, double declining method, modified accelerated cost recovery system and present worth calculation procedures are given, together with examples. In the second part, corrosion management, including the people factor in corrosion failure is briefly presented. Some of the expert systems presently available in the literature are briefly discussed. 

Tax-law changes put into effect with the 1981 Economic Recovery Act and modified in 1986 have instituted a new system of depreciation known as the Accelerated Cost Recovery System (ACRS). The latter has replaced the former ADR system for most tangible depreciable property used in a trade or business placed in service on or after January 1, 1981. In the ACRS [or Modified Accelerated Cost Recovery System (MACRS) which went into effect for property put into service on or after January 1, 19871, the recovery of capital costs as depreciation was determined over statutory periods of time using statutory percentages depending on the class life of the property and the number of years since the property was placed in service. The statutory periods of time were generally shorter than the useful life of the asset or the period for which it was used to produce income. 

The statutory class lives for the Modified Accelerated Cost Recovery System are as follows where the key factor is the ADR (Asset Depreciation Range) midpoint designation, which corresponds in general to the asset guideline period shown in Table 2 ... 

Asset values of property when depreciated by Accelerated Cost Recovery System (ACRS), Modified Accelerated Cost Recovery System (MACRS), and double declining-balance (200-percent) metbod with switch to straight-line. 

As of 1999, the modified accelerated cost recovery system (MACRS) was in force. The depreciation rates applied to an asset are as follows for most CPI assets with a 7-year life ... 

The current depreciation system is the Modified Accelerated Cost Recovery System (MACRS), and chemical industries are in the seven-year life category. The rates for years one through eight are 14.29, 24.49, 17.49, 12.29, 8.93, 8.92, 8.93, and 4.46, respectively. The depreciation is spread over an eight-year period for a seven-year asset. It is assumed that, during the first year of the life of the asset, full benefit will not be received from the asset. Therefore, a half-year convention is adopted, and the remaining recovery is made in the eighth year. 

Depreciation of capital falls under the authority of governmental tax agencies. The assets are categorised in classes of different lifetimes, as for example 3, 5,1, 10, 15 and 20 years. The depreciation factors are adapted to reflect the most rational replacement policy from taxation viewpoint. As illustration, in USA the tax reform act from 1986 defined a Modified Accelerated Cost Recovery System (MACRS). Process equipment falls in 5-year class, as shown in the following table ... 

Depreciation follows the United States Modified Accelerated Cost Recovery System (MACRS). Under IRS regulations, most utility-type investments use either a 15- or 20-year depreciation schedule. Certain investments, such as renewables, are allowed to use a 5-year depreciation schedule. The capital recovery factor (CRF) is calculated using... 

Assets (such as machines, cars, and computers) lose their value over a period of time. For example, a computer purchased today by a company for 2000 is not worth as much in three or four years. Companies use this reduction in value of an asset against their before-tax income. There are rules and guidelines that specify what can be depreciated, by how much, and over what period of time. Examples of depreciation methods include the Straight Line and the Modified Accelerated Cost Recovery System (MACRS). 

---