Hazel purchased a new business asset (five-year asset) on September 30, 2017, at a cost of $100,000. On October 4, 2017, Hazel placed the asset in service. This was the only asset Hazel placed in service in 2017. Hazel did not elect § 179 or additional first-year depreciation. On August 20, 2018, Hazel sold the asset. Determine the cost recovery for 2018 for the asset.

a. $14,250

b. $19,000

c. $23,750

d. $38,000

e. None of the above

Question

Velasquez

Business

21 January, 15:35

Hazel purchased a new business asset (five-year asset) on September 30, 2017, at a cost of $100,000. On October 4, 2017, Hazel placed the asset in service. This was the only asset Hazel placed in service in 2017. Hazel did not elect § 179 or additional first-year depreciation. On August 20, 2018, Hazel sold the asset. Determine the cost recovery for 2018 for the asset.

a. $14,250

b. $19,000

c. $23,750

d. $38,000

e. None of the above

+1

Answers (1)

Know the Answer?

Amiya Small · Answer 1

The cost recovery for 2018 for the asset is $23,750.

Explanation:

The asset was placed in service on october, 2018, as a result mid quarter convention is used. 2019 is the second year of cost recovery,

= $100,000 * 38%

= $38,000

cost of recovery = $38,000 * 2.5/4

= $23,750

Therefore, The cost recovery for 2018 for the asset is $23,750.