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Instructions on How to Create a MACRS Depreciation Schedule

Instructions on How to Create a MACRS Depreciation Schedule

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Published by Mary
How to create a MACRS Depreciaton Schedule.
How to create a MACRS Depreciaton Schedule.

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Published by: Mary on Jun 12, 2008
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MACRS Depreciation Method - Instructions for Schedule
MJC Revised 1/2012 Page 1
Property Class Under GDSClass recoveryperiod (Useful Life)Asset types
3-year Tractor units for over-the-road use.Any race horse over 2 years old when placed in service. (All race horses placed in serviceafter December 31, 2008, and before January 1, 2014, are deemed to be 3-year property,regardless of age.)Any other horse (other than a race horse) over 12 years old when placed in service.Qualified rent-to-own property (defined in pub. 946).5-year Automobiles, taxis, buses, and trucks.Computers and peripheral equipment.Office machinery (such as typewriters, calculators, and copiers).Any property used in research and experimentation.Breeding cattle and dairy cattle.Appliances, carpets, furniture, etc., used in a residential rental real estate activity.Certain geothermal, solar, and wind energy property.7-year Office furniture and fixtures (such as desks, files, and safes).
 
Agricultural machinery and equipment.Any property that does not have a class life and has not been designated by law as being inany other class.Certain motorsports entertainment complex property placed in service before January 1, 2012(defined later).Any natural gas gathering line placed in service after April 11, 2005. See Natural gasgathering line, natural gas distribution line, and electric transmission property, later.10-year Vessels, barges, tugs, and similar water transportation equipment.Any single purpose agricultural or horticultural structure.Any tree or vine bearing fruits or nuts.Qualified small electric meter and qualified smart electric grid system (defined in pub. 946)placed in service on or after October 3, 2008.15-year
 
Certain improvements made directly to land or added to it (such as shrubbery, fences, roads,sidewalks, and bridges).Any retail motor fuels outlet (defined in pub. 946), such as a convenience store.Any municipal wastewater treatment plant.Any qualified leasehold improvement property (defined in pub. 946) placed in service beforeJanuary 1, 2012.Any qualified restaurant property (defined in pub. 946) placed in service before January 1,2012.Initial clearing and grading land improvements for gas utility property.Electric transmission property (that is section 1245 property) used in the transmission at 69or more kilovolts of electricity placed in service after April 11, 2005. See Natural gasgathering line, natural gas distribution line, and electric transmission property, later.Any natural gas distribution line placed in service after April 11, 2005. See Natural gasgathering line, natural gas distribution line, and electric transmission property, later.
 
Any qualified retail improvement property placed in service before January 1, 2012.20-year Farm buildings (other than single purpose agricultural or horticultural structures).Municipal sewers not classified as 25-year property.Initial clearing and grading land improvements for electric utility transmission anddistribution plants.
 
MACRS Depreciation Method - Instructions for Schedule
MJC Revised 1/2012 Page 2
Property Class Under GDS
 
Class recoveryperiod (Useful Life)Asset types
27.5-year Residential rental property. This is any building or structure, such as a rental home (includinga mobile home), if 80% or more of its gross rental income for the tax year is from dwellingunits. A dwelling unit is a house or apartment used to provide living accommodations in abuilding or structure. It does not include a unit in a hotel, motel, or other establishment wheremore than half the units are used on a transient basis. If you occupy any part of the buildingor structure for personal use, its gross rental income includes the fair rental value of the partyou occupy.31.5-year Nonresidential real property. This is section 1250 property, such as an office building, store,or warehouse, that is neither residential rental property nor property with a class life of lessthan 27.5 years.Table A-1 from IRS Publication 946 (2010) Year Depreciation rate for recovery period (decimal format) 
3-year
 
5-year
 
7-year
 
10-year
 
15-year
 
20-year
 
1 .3333 .2000 .1429 .1000 .0500 .037502 .4445 .3200 .2449 .1800 .0950 .072193 .1481 .1920 .1749 .1440 .0855 .066774 .0741 .1152 .1249 .1152 .0770 .061775 .1152 .0893 .0922 .0693 .057136 .0576 .0892 .0737 .0623 .052857 .0893 .0655 .0590 .048888 .0446 .0655 .0590 .045229 .0656 .0591 .0446210 .0655 .0590 .0446111 .0328 .0591 .0446212 .0590 .0446113 .0591 .0446214 .0590 .0446115 .0591 .0446216 .0295 .0446117 .0466218 .0466119 .0446220 .0446121 .02231
 
MACRS Depreciation Method - Instructions for Schedule
MJC Revised 1/2012 Page 3
Love Thy Pets Inc.,Depreciation Schedule
 – 
MACRSFor 5 Year Asset
Cost of Asset $20,000Residual Value 5,000Useful Life 5 Years
A B C D E FEnd of year CostDepreciationRateAnnualDepreciationExpenseAccumulatedDepreciationBook ValueAt end of year1 $20,000 .2000 $4,000 $ 4,000 $16,0002 $20,000 .3200 $6,400 $10,400 $ 9,6003 $20,000 .1920 $3,840 $14,240 $ 5,7604 $20,000 .1152 $2,304 $16,544 $ 3,4565 $20,000 .1152 $2,304 $18,848 $ 1,1526 $20,000 .0576 $1,152 $20,000 $ 0
Systematic Instructions
Always start with the three-line header, which in this case includes the name of the corporation,the title of the form, and the assets useful life.1.
 
On the first line place the title “Cost of Asset” and then the dollar value of th
e asset.2.
 
On the second line place the title “Residual Value” and the dollar value of the asset at the
end of its useful life to the corporation.3.
 
On the third line place the title “Useful Life” and the amount of years the asset will be of 
value to the corporation. You can use the first two charts to determine what the useful lifeof the asset will be for the corporation. Please take note that an asset does not cease toexist just because it is no longer useful to the corporation.4.
 
On the fourth line label the columns alphabetically.5.
 
On the fifth line use the following labels:
End of year CostDepreciationRateAnnualDepreciationExpenseAccumulatedDepreciationBook ValueAt end of year

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thank you for this useful instruction!! xoxox
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