Question

stering Depreciation Depreciation of property other than real property begins in the middle of the in which it is placed in service when more than: 25% of the total cost ofall depreciable property placed in service du occurs during the fourth quarter. 40% of the total cost of property less any Section 179 deduction placed in service during the year occurs during the fourth quarter. 40% of the total cost of all depreciable property placed in service during the ye occurs during the fourth quarter. 25% of the total cost of Section 179 property placed in service during the year occurs during the fourth quarter a. b, ar d, On May 11, 2012, your calendar year firm purchases for $10,000 a new office machine with an estimated salvage value of $1,000. If the machine is the only fixed asset purchased in 2012 and no Section 179 deduction is taken, what is your firm's maximum 2012 deduction for depreciation? a. $6,000 b. $1,429 c. $2,000 d. $5,715 On May 11, 2012, your calendar year firm purchases for $10,000 a used office machine with an estimated salvage value of $1,000. If the machine is the only fixed asset purchased in 2012 and no Section 179 deduction is taken, what is your firm's maximum 2012 deduction for depreciation? a. $6,000 b. $1,429 c. $2,000 d. $5,715 Depreciation of fixed assets under GAAP v. for tax purposes is based on a. original cost less salvage value under GAAP v. original cost for tax b. original c c. original cost less the salvage value both under GAAP and for d. original cost both under GAAP and for tax purposes. ost for GAAP v. the original cost less salvage value for tax purposes. x purposes.

Answer 1

1. Answer is option C

40% of the total cost of all depreciable property placed in service during the year occurs during the fourth quarter.

Quarter convention is only applicable when at least 40% of the property is placed in service during the last quarter of the tax.

2. Answer is option C

$2000

(10000*20% = 2000)

As section 179 is not taken, MACRS rate schedule applies

3. Answer is option C

$2000

(10000*20% = 2000)

As section 179 is not taken, MACRS rate schedule applies

4. Answer is option A

Original cost less salvage value under GAAP v. original cost for tax purposes

Under GAAP, the depreciable value is original cost minus salvage value. For tax purpose, MACRS is used for depreciation and deprecation through MACRS is based on original cost.