Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
Problem 8-3 Modified Accelerated Cost Recovery System (MACRS), Election to Expense (Section 179) (LO 8
Problem 8-3
Modified Accelerated Cost Recovery System (MACRS), Election to Expense (Section 179) (LO 8.2, 8.3)
Mike purchases a new heavy-duty truck (5-year class recovery property) for his delivery service on March 30, 2019. No other assets were purchased during the year. The truck is not considered a passenger automobile for purposes of the listed property and luxury automobile limitations. The truck has a depreciable basis of $42,000 and an estimated useful life of 5 years. Assume half-year convention for tax.
Click here to access the depreciation tables.
a. Calculate the amount of depreciation for 2019 using financial accounting straight-line depreciation (not the straight-line MACRS election) over the truck's estimated useful life.
b. Calculate the amount of depreciation for 2019 using the straight-line depreciation election, using MACRS tables over the minimum number of years with no bonus depreciation or election to expense.
$fill in the blank 46287ffb602d02d_1
c. Calculate the amount of depreciation for 2019, including bonus depreciation but no election to expense, that Mike could deduct using the MACRS tables.
$fill in the blank 0ee19c059ff7035_1
d. Assume no income limit on the expense election. Calculate the amount of depreciation for 2019 including the election to expense but no bonus depreciation that Mike could deduct.
$fill in the blank c2f436fc3032011_1
Expert Solution
a) Computation of Amount of Depreciation for 2019 using financial accounting straight-line depreciation:
Depreciation = (Cost - Salvage Value)/ Number of Years
= (42,000-0)/5*9/12
= 6,300
b) Computation of Amount of Depreciation for 2019 using the straight-line depreciation election, using MACRS tables over the minimum number of years with no bonus depreciation or election to expense:
Depreciation = 10% of Total Purchases
= 42,000 * 10%
= 4,200
c) Computation of Amount of Depreciation for 2019, including bonus depreciation but no election to expense, that Mike could deduct using the MACRS tables:
Depreciation = Depreciation + Bonus - Expense
= 42,000 + 0 - 0
= 42,000
d) Computation of Amount of Depreciation for 2020 including the election to expense but no bonus depreciation:
Depreciation = Depreciation + Expense - Bonus
= 42,000 + 0 - 0
= 42,000
.
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
