Question

Required information [The following information applies to the questions displayed below.] DLW Corporation acquired and placed in service the following assets during the year: Date Cost Asset Acquired Basis Computer equipment 3/8 $ 12,500 Furniture 4/15 18,100 Commercial building 12/13 311,000 Assuming DLW 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.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

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

     

ASSET	YEAR 1 COST RECOVERY
COMPUTER EQUIPMENT
FURNITURE
COMMERCIAL BUILDING
TOTAL

Answer 1

Solution:

Asset	Year 1 Cost Recovery
Computer Equipment	$                                     2,500
Furniture	$                                     2,586
Commercial Building	$                                        333
Total	$                                     5,419

Working:

Assets	Place in service	MACRS [Convention]	Recovery Period	Original Basis (a)	Macrs Rate (b)	Depreciation Expense (a*b)
Computer Equipment	Mar. 8	Half - Year	5 Years	$                 12,500	20.00%	$                     2,500
Furniture	Apr. 15	Half - Year	7 Years	$                 18,100	14.29%	$                     2,586
Commercial Building	Dec. 13	Mid Month	39 Years	$               311,000	0.107%	$                         333
Total						$                     5,419