Question

Angela purchases an old refrigerator for her yogurt shop at a cost of $20,000 in 2015 that she figures will last another 5 years. Assuming the IRS tells you the fridge has a 7 year tax life, what is the most possible cost recovery deductions Angela can take in 2015 and 2016?

$2,858 and $4,898

$4,000 and $6,400

$12,000 and $3,200

$11,429 and $2,449

Answer 1

Solution:

The Answer is $ 2,858 and $ 4,898.

Explanation:

Year	Opening Balance(a)	Macrs Rate@ 7 years (b)	Depreciation Expense(a*b)
2015	$                            20,000	14.29%	$ 2,858
2016	$                            20,000	24.49%	$ 4,898

Notes:

1) As per IRS, We have taken Half Year 7 year class asset marcs rates to calculate depreciation.

2) So, Remaining options are Incorrect.