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23 August, 09:37

Deirdre's business purchased two assets during the current year (a full 12-month tax year). Deirdre placed in service computer equipment (5-year property) on January 20 with a basis of $15,000 and machinery (7-year property) on September 1 with a basis of $15,000. Calculate the maximum depreciation expense, (ignoring §179 and bonus depreciation). (Use MACRS Half-Year Convention) (Round final answer to the nearest whole number.)

A. $6,000.

B. $5,144.

C. $1,286.

D. $5,786.

E. None of the choices are correct.

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  1. 23 August, 11:30
    0
    D. $5,786.

    Explanation:

    The mid-quarter convention applies, so the calculation of property and the machinery is 4 quarter property.

    depreciation expense on property = $15000*0.35

    = $2520

    depreciation expense on machinery = 15000*0.0357

    = $536

    total depreciation expense = $5250 + $536

    = $5786

    Therefore, The maximum depreciation expense, (ignoring §179 and bonus depreciation). (Use MACRS Half-Year Convention) is $5786
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