Question

Chandler acquired the following new assets during 2019: Asset Cost Date February 1 September 3 December 1 Agricultural machinery and equipment Calculators Trucks (not subject to any depreciation limitation) $75,000 18,000 95,000 Chandler does not elect immediate expensing under $ 179 but takes the additional first-year depreciation for the agricultural machinery and equipment and calculators. Click here to access the depreciation table to use for this problem. a. What MACRS convention applies to the assets? Mid-quarter b. What class of property is each asset for MACRS? Agricultural machinery - seven years, calculators - five years, Trucks - five years c. The cost recovery for the current year is: Agricultural machinery and equipment: Calculators: Trucks:

Answer 1

Answer a) Mid Quarter

Answer b) Agriculture machinery & equipment seven year, calculator five years, trucks five year

Answer C) The cost recovery for the current year are as under;

Agriculture Machinery & equipment = $46,875

Calculators = $10,350

Trucks    = $49,875

Total = $107,100

Working Note :

Agriculture Machinery & equipment

Additional first year depreciation (75000*0.5) = $37,500

Macrs cost recovery (75000-37500)*0.25 = $9,375

Total    = $46,875

Calculators (Five year class) :

Additional first year depreciation (18000*0.5) = $9,000

Macrs cost recovery (18000-9000)0.15    = $1,350   

Total    = $10,350

(Exhibit 8.5 third quarter)

Trucks (Five Year classes):

Additional first year depreciation(95000*0.5) = $47,500

macrs cost recovery (95000-47500)0.05    = $2,375

Total    =$49,875

(Exhibit 8.5 forth quarter)