The client has chosen to take Bonus Depreciation on $400,000 in new assets purchased in 2018.
With the bonus depreciation, the asset makeup of the new assets are as follows:
Description |
Date Purchased |
Purchase Amount |
Bonus DepreciationTaken |
Remaining Depreciable Basis |
5-year MACRS Property |
October 2, 2018 |
$480,000 |
$80,000 | $400,000 |
7-year MACRS Property |
September 10, 2018 |
$320,000 |
$320,000 | - |
Delivery Truck (over 6,000 lbs): 5-year MACRS Property |
October 12, 2018 |
$40,000 |
- | $40,000 |
Using the MACRS tables calculate the Depreciation Expense for the remaining basis for 2018.
Answer:
a) Details given are as follows:
i) 5-year MACRS Property purchased at a cost of $480,000.
ii) Purchased in October 2, 2018
iii) Bonus depreciation taken = $80,000
iv) Remaining depreciable basis = $400,000
a.1) The calculation of depreciation is as follows:
Depreciation method = 200%, Convention = Half-Year
2018 = Bonus depreciation $80,0000
2019 = $400,000 X 20% = $80,000
2020 = $400,000 X 32% = $128,000
2021 = $400,000 X 19.20% = $76,800
2022 = $400,000 X 11.52% = $46,080
2023 = $400,000 X 11.52% = $46,080
2024 = $400,000 X 5.76% = $23,040
b) Details given are as follows:
i) 7-year MACRS Property purchased at a cost of $320,000.
ii) Purchased in September 10,2018
iii) Full Bonus depreciation taken = $320,000
iv) Remaining depreciable basis = NIL
Hence, further calculation of depreciation is not required.
c) Details given are as follows:
i) Delivery Truck (over 6,000 lbs): 5-year MACRS Property purchased at a cost of $40,000.
ii) Purchased in October 12, 2018
iii) Bonus depreciation taken = NIL
iv) Remaining depreciable basis = $40,000
c.1) The calculation of depreciation is as follows:
Depreciation method = 200%, Convention = Half-Year
2018 = $40,000 X 20% = $8,000
2019 = $40,000 X 32% = $12,800
2020 = $40,000 X 19.20% = $7,680
2021 = $40,000 X 11.52% = $4,608
2022 = $40,000 X 11.52% = $4,608
2023 = $40,000 X 5.76% = $2,304
The client has chosen to take Bonus Depreciation on $400,000 in new assets purchased in 2018....
The client has chosen to take Bonus Depreciation on $400,000 in new assets purchased in 2018. With the bonus depreciation, the asset makeup of the new assets are as follows: Description Date Purchased Purchase Amount Bonus DepreciationTaken Remaining Depreciable Basis 5-year MACRS Property October 2, 2018 $480,000 $80,000 $400,000 7-year MACRS Property September 10, 2018 $320,000 $320,000 - Delivery Truck (over 6,000 lbs): 5-year MACRS Property October 12, 2018 $40,000 - $40,000 Using the MACRS tables calculate the Depreciation Expense...
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