XYZ Enterprises is considering the purchase of a new machine for $75,000 this year, to improve its packaging system . The machine has a 7-year recovery period and is expected to have a salvage value of $5,000.
a) Develop a depreciation schedule for this asset using the MACRS depreciation percentages.
XYZ Enterprises expects to report pretax income of $500,000 in 2016 and the financial manager is considering the timing of this purchase.
b) What depreciation expense will it be able to claim this year?