At the beginning of the year, Anna began a calendar-year business and placed in service the...

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At the beginning of the year, Anna began a calendar-year business and placed in service the...

At the beginning of the year, Anna began a calendar-year business and placed in service the following assets during the year:

	Date	Cost
Asset	Acquired	Basis
Computers	1/30	$	40,000
Office desks	2/15	$	44,000
Machinery	7/25	$	87,000
Office building	8/13	$	416,000

Assuming Anna 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.)

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

b. What is Anna’s year 2 cost recovery for each asset?

business accounting

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Answer 1

Answer #1

							Amount $
a.)		Date		Recovery	Cost		Cost
	Asset	Acquired	Quarter	Period	Basis $-A	Rate-B	Recovery (A x B )
	Computers	Jan-30	1	5	40,000	20.00%	8,000
	Office desks	Feb-15	1	7	44,000	14.29%	6,288
	Machinery	Jul-25	3	7	87,000	14.29%	12,432
	Office building	Aug-13	3	39	4,16,000	0.963%	4,006

	Office building	0.963%	(1/39*4.505/12)
							Amount $
b.)		Date		Recovery	Cost		Cost
	Asset	Acquired	Quarter	Period	Basis $-A	Rate-B	Recovery (A x B )
	Computers	Jan-30	1	5	40,000	32.00%	12,800
	Office desks	Feb-15	1	7	44,000	24.29%	10,688
	Machinery	Jul-25	3	7	87,000	24.29%	21,132
	Office building	Aug-13	3	39	4,16,000	2.564%	10,666

	Office building	2.564%	(1/39)

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