Question
ABC Corporation purchased a piece of equipment for a purchase price of $50,000. In addition to the purchase price, ABC Corporation incurred the following costs:
ABC Corporation purchased a piece of equipment for a purchase price of $50,000. In addition to the purchase price, ABC Corporation incurred the following costs:
$3,500 Sales Tax
$ 800 Installation and Customization
$400 Shipping Costs
How much should they capitalize for tax purposes
A taxpayer places in service an asset with a cost of $10,000 and a 7 year life. (Assume half-year convention applies.) How much depreciation is allowed in the first year. (Assume section 179 and bonus depreciation do not apply.)
Based on the information in question #2, how much depreciation would be allowed in year #8?
Calculate the first year of depreciation on a $1,000 asset using half-year convention assuming that the asset has an 8 year life and a 400% declining balance depreciation method. (Note - you will have to calculate this manually.)
When should you test to determine whether mid-quarter convention applies?
A. | On the original capitalized cost for the year, before section 179 or bonus depreciation is taken. | |
B. | After the original capitalized cost is reduced by the amounted elected to be expensed under section 179 , but before any bonus depreciation is taken. | |
C. | After the original capitalized cost is reduced by the amounted elected to be expensed under section 179 and any bonus depreciation is taken. | |
D. | The taxpayer can elect mid-quarter convention whenever mid-quarter depreciation exceeds half-year convention depreciation.
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