I B C D E F G 1 Ans: 2 Requirement a) Amount Asset Expense Workings Basis SO 5 Computer Equipment 6 Office Equipment 7 Furniture 8 Start-up costs 9 Start-up immediate expense $5,000 $195 $17.000 Given 50,000 $195 SO(Total start-up costs) - (Phase-out threshold) $5,000 (Maximum immediate expense) - (Immediate expense phase-out) $12,000 (Total start-up costs) — (Allowable immediate expense) 180.00 15 years, $195 66.67 (Remaining start-up costs) (Recovery period in months) 3 3 month October to December) 12 Y2 Cost Recovery Yl Cost Recovery Start-up costs Y1 Original Remaining Depreciation Description Quarter Rate Basis Expense $15,000 $0 $15,000 4th 5.00% $750 Maximum immediate expense $10,000 $10.000 4th 3.57.% $357 Total start-up costs $3.000 $0 $3.000 4th 3.57% $107 Phase-out threshold $17,000 $5,000 $12,000 N/A Y1 $200(Refer start-up costs Y1) Immediate expense phase-out $5,000 Allowable immediate expense Total Cost Recovery Expense $6,414 Remaining start-up costs Recovery period in months Monthly straight-line amortization Remaining eSys' business months during year 1 Depreciation Quarter Rate Expense $15.000 sol $15.000 4th T28.000 $5,700 Year 1 straight-line amortization for startup costs $10.000 SO $10,000 4th 27.55.% $2.755 $3.000 $3,000 4th 27.55.% $827 $17,000 $5,000 $12,000 NA (66.67*12) $800 $18,000 20.00% $3,600 Description $4.000 HY 14.29% $572 Customer list (section 197 intangible) 10,000 N/A Y2 $500 (Refer customer list Y2) Recovery period in months Total Cost Recover/ Expense $14.753 Monthly straight-line amortization eSys' business months during year 2 Year 1 straight-line amortization for customer list Original Basis Expense Basis $200 Monthly straight-line amortization) x (eSys' business months during year 1) || Asset 14 Computer Equipment 15 Office Equipment 16 Furniture 17 Stan -up costs 18 Delivery van 19 Pinball machine 20 Customer List SO HY Customer List Y2 Amount Explanation 10,000 Given 180 Section 197 55.56 (Customer list ) / (Recovery period in months) 9 9 months (April through December) $500 (Monthly straight-line amortization) x (eSys' business months during year 2) 23 Requirement b) Adjusted Basis Asset Original Basis Expense $0 $5. Year 1 Year 2 Cost 2012 Ending Cost Recovery Basis Recovery $750 $5,700 $8.550 $2.755 $6,888 $107 $827 $2.066 $8001 $11,000 $3,600 $14.400 $572 $3,428 $500 $9,500 $1.4141 $14,753 $55,833 26 Computer Equipment 27 Office Equipment 28 Furniture 29 Start-up costs 30 Delivery van 31 Pinball machine 32 Customer List 33 Totals 000 $15.000 $10.000 $3.000 $17,000 $18.000 $4,000 $10,000 $77,000 SON SO SO so
к А 1 Ans: 2 Requirement a) Start-up costs Y1 Description Amount Workings Asset 5 Computer Equipment 6 Office Equipment 7 Furniture 8 Start-up costs 9 Start-up immediate expense Original Basis 15000 10000 3000 17000 Yi Cost Recovery Remaining Expense Basis 10 =B5-C5 =B6-C6 =B7-C7 5000 =B8-C8 Depreciation Quarter Rate Expense 4th 0.05 =B5*F5 4th 0.0357 =B6*F6 4th 0.0357 =B7*F7 N/A 200 5000 Total Cost Recovery Expense =SUM(G5-G9) Y1 Maximum immediate expense Total start-up costs Phase-out threshold (Refer start-up costs Y1) Immediate expense phase-out Allowable immediate expense Remaining start-up costs Recovery period in months Monthly straight-line amortization eSys' business months during year 1 5000 $195 17000 Given 50000 $195 (Total start-up costs) - (Phase-out threshold) =J5-38 (Maximum immediate expense) - (Immediate expense phase-out) =J6-9 (Total start-up costs) — (Allowable immediate expense) 180 15 years, $195 =J10/J11 (Remaining start-up costs) (Recovery period in months) 3 month (October to December) Y2 Cost Recovery Asset 0.38 Year 1 straight-line amortization for startup costs =J12*J13 Monthly straight-line amortization) x (eSys' business months during year 14 Computer Equipment 15 Office Equipment 16 Furniture 17 Stan -up costs 18 Delivery van 19 Pinball machine 20 Customer List Remaining Original Basis Expense Basis 15000 =B14-C14 10000 =B15-C15 3000 =B16-C16 17000 5000 =B17-C17 18000 4000 10000 Depreciation Rate Quarter Expense 4th =B14*F14 4th 0.2755 =B15*F15 4th 0.2755 =B16*F16 (66.67*12) =J1212 10.2 =B18*F18 0.1429 =B19*F19 Y2 500 Total Cost Recover/ Expense =SUM(G14:G20) |HY N/A (Refer customer list Y2) Description Customer list (section 197 intangible) Recovery period in months Monthly straight-line amortization eSys' business months during year 2 Year 1 straight-line amortization for customer list Customer List Y2 Amount Explanation 10000 Given 180 Section 197 =J19/J20 (Customer list ) / (Recovery period in months) 9 months (April through December) =J21*J22 Monthly straight-line amortization) x (eSys' business months during year 23 Requirement b) 24 Adjusted Basis Asset Year 1 Original Year 2 Cost 2012 Ending Expense Cost Basis Recovery Basis Recovery 15000 Jo =G5 =G14 =B26-(C26+D26+E26) 10000 =G6 =G15 =B27-(C27+D27+E27) 3000 =G7 =B28-(C28+D28+E28) 17000 5000 =G8 =G17 =B29-(C29+D29+E29) 18000 0 0 =G18 =B30-(C30+D30+E30) 4000 =G19 =B31-(C31+D31+E31) 10000 O TO =B32-C32+D32+E32) =SUMB26-B32) =SUMD26:D32) =SUM(E26-E32) =SUM(F26:F32) 26 Computer Equipment 27 Office Equipment 28 Furniture 29 Start-up costs 30 Delivery van 31 Pinball machine 32 Customer List 33 Totals =G16 =G20