MF and MA method depreciation calculation

MF stands for Modified Accelerated Cost Recovery System (MACRS) Formula.

MA is also MACRS Formula. The 'MA' denotes that this method includes the 168(k) Bonus Allowance.

Examples:

• MF200 Calculation based on Acquisition Value of $25,000 with seven Year Life:
  • First‑Year Calculation: $25,000 ÷ 7 (Life) × 2 (200%) ÷ 2 (Half‑Year) = $3,571.43
  • Second‑Year Calculation: ($25,000 − $3,571.43 (Prior‑Year Depreciation)) ÷ 7 (Life) × 2 (200%) = $6,122.45
  • Third Year Calculation - Same formula as second year applies until asset switches to Straight Line
• MA200 Calculation based on Acquisition Value of $25,000 with 7 Year Life with 50% bonus:
  • The asset takes 50% of Acquisition Value as a 168k Bonus. The starting Depreciable Basis is 50% of the Acquisition Value
  • First‑Year Calculation: $12,500 ÷ 7 (Life) × 2 (200%) ÷ 2 (Half‑Year) = $1,785.72
  • Second‑Year Calculation: ($12,500 − $1,785.72 (Prior‑Year Depreciation)) ÷ 7 (Life) × 2 (200%) = $3,061.22
  • Third Year Calculation - Same formula as second year applies until asset switches to Straight Line

Notes:

• MF and MA are, by default, Half-Year Convention Methods. The Half-Year Convention takes six months of depreciation on year of service and year of disposal. The Calculation in the year of disposal will be: ((Prior Year Net Book Value\Life)\2)
• For MF, if you acquire and dispose of an asset in the same tax year, the asset won’t take depreciation
• For MA, you can’t dispose within the same tax year as the asset's Placed-in-Service Date. Change the depreciation method to MF to allow the disposal
• Your program version determines the allowed percentages for 168 allowance. If you aren't able to take the 168% needed, update your program to the latest version