Question

DLW Corporation acquired and placed in service the following assets during the year:

	Date	Cost
Asset	Acquired	Basis
Computer equipment	2/17	$	10,000
Furniture	5/12	$	17,000
Commercial building	11/1	$	270,000

Assuming DLW does not elect §179 expensing and elects not to use bonus depreciation, answer the following questions: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

a. What is DLW's year 1 cost recovery for each asset?

b. What is DLW's year 3 cost recovery for each asset if DLW sells all of these assets on 1/23 of year 3?

    

Answer 1

Quarter | 1st 2nd January to march April to June July to September October to December 3rd 4th DLW's year 1 cost recovery for each asset as follows: Date of Purchase Recovery period Original Cost Rate of Depreciation Depreciation Amount Type of Asset Quarter Computer Equipment February 17 Funiture May 12 Building November 1 Total 1st 2nd 4th 5 years 7 years 39 years $10,000 $17.000 $270.000 20% 14.29% 0.32% $2.000 $2.429 $864 $5,293 b) Computation as follows:

Computation as follows: Type of Asset Computer Equipment Furniture Building Total Recovery Original Cost period $10,000 5 years $17,000 7 years $270,000 39 years Rate of Depreciation 19.20% 17.49% 2.57% Portion of Depreciation year | Amount 50% $960 50% $1,487 4.16% $289 $2,736