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.

Question

Nikolai Stephenson

Business

1 May, 18:11

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.

+2

Answers (1)

Know the Answer?

Arjun Petty · Answer 1

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