Question

7. Prepare a depreciation schedule to be used for tax purposes for a $1,170,000 office building. The office building is placed in service in the fifth month of the company's tax year. The cost of the land is not included in the $1,170,000. Tgnore any special depreciation allowances. (10 points)

Answer 1

As per provision of the Income tax Act, 1. Depreciation should be provided to office building at the rate of 10% pa 2. Company may follow" either written down value & Straight line method. 3. straight line method will allow only to Company engaged in Power generation Power generation and distribution. 4. Assume that company not engaged in power generation, power generation and to distribution.copico s. Therefore we should follow written down value method. 6. If the Asset was put to use for ress than 180 days in Previous year, ther half rate of depreciation should be provide. Her VEIGH

Given that office building CAsset) pla in service in the fifth of Com month of Company i.e, put to use for more than 180 days. 11220 10 Full rate of depreciation should be Provide. Sorte r 7. Rate applicable to office building as per Income tan rules is 101. As per Income the Act, No depreciation on land. coger cua qarori Given that e cost of office building = $11,70,000 (-) cost of Land (included) TO Lowband world tolom. CIANI 11, 70,000 Depreciation -11,70,000 xlor o ma =$1470,000 Dol

10. Depreciation should be provided by the company for Previous year. 2$ 1,70,000 Alext year ... closing WDV = 11,70,000 – 170,000 - 10,00,000.