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.