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McCanless Co. recently purchased an asset for $1,950,000 that will be used in a 3-year project. The asset is in the 4-year MACRS class. The depreciation percentage each year is 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. What is the amount of depreciation in Year 2?
A. $144,495B. $649,935C. $288,795D.$866,775E. $650,000

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Answer:

The amount of depreciation in year 2 = Depreciation rate x Cost

                                                              = 44.45% x $1,950,000

                                                              = $866,775

The correct answer is D

Explanation:  Since the depreciation rate in year 2 was provided, then, we need to multiply it by the cost of the asset. This gives the amount of depreciation in year 2.          

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