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11 June, 00:16

Wheeler LLC purchased two assets during the current year (a full 12-month tax year). On November 16 Wheeler placed in service computer equipment (five-year property) with a basis of $15,500 and on April 20 placed in service furniture (seven-year property) with a basis of $11,300.

Required:

Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).

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  1. 11 June, 00:33
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    The maximum depreciation expense is $2,792

    Explanation:

    In order to calculate the maximum depreciation expense we would have to calculate the depreciation of service computer equipment and the service furniture as follows:

    depreciation of service computer equipment=$15,500*5%

    depreciation of service computer equipment=$775

    depreciation of service furniture=$11,300*17.85%

    depreciation of service furniture=$2,017

    Therefore, maximum depreciation expense=depreciation of service computer equipment+depreciation of service furniture

    maximum depreciation expense=$775+$2,017

    maximum depreciation expense=$2,792
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