What system prescribes periods for nine classes of plant assets for depreciation?

The Modified Accelerated Cost Recovery System (MACRS) is a method established by the IRS for the depreciation of certain assets, including plant assets. This system provides specific guidelines for the depreciation of nine different classes of plant assets, each assigned a particular recovery period. The classes defined under MACRS enable businesses to allocate the cost of their assets over a specified period of time, promoting consistency and compliance with tax regulations.

Under MACRS, assets are categorized into distinct classes, such as 3-year, 5-year, 7-year, and so on, with each category reflecting the typical useful life of assets within that class. This specificity allows businesses to recover the costs of their investments more rapidly, encouraging capital expenditure.

Other methods mentioned, like the Asset Depreciation Range or the Straight-line method, do not specify classes of assets with defined periods in the way MACRS does. The Accelerated Cost Recovery System is related but does not provide the same framework of nine classes, which is uniquely characteristic of MACRS. Hence, MACRS is recognized as the system that prescribes the periods for those asset classes for depreciation purposes.