A manufacturing company has purchased three assets: Item, Lathe, Truck, and Building. The initial cost of the Lathe is $45,000, the Truck is $25,000, and the Building is $800,000. The book life of the Lathe is 12 years, the Truck is 200,000 miles, and the Building is 50 years. The MACRS class of the Lathe is 7 years. What is the MACRS class of the Truck?
1) 5
2) 7
3) 12
4) 50

The correct option is 1) 5. The MACRS class for a truck is typically 5 years. This classification is used for depreciation purposes and is distinct from other classes such as those for buildings and machinery.

Vehicles such as trucks are generally classified under a 5-year property for the Modified Accelerated Cost Recovery System (MACRS), which is a method of depreciation for tax purposes in the United States. For instance, if you purchased a truck for business use, it would be assigned this 5-year classification, irrespective of its actual useful life in terms of mileage.

In accounting, depreciation refers to an allocation of the cost of an asset over its useful life. For example, the lathe with a book life of 12 years and in the MACRS class of 7 years will have a different depreciation schedule than the truck. Each type of asset such as buildings, vehicles, and machinery has distinct depreciation rates and methods of calculation. Hence, the correct option is 1) 5.