In 2020, Murphy Manufacturing Inc. acquired and placed in service a piece of machinery to manufacture interactive toys for dogs. The following costs were associated with the machinery:

• Purchase price from vendor$2,130,000
• Tax on purchase price $150,000
• Shipping/Delivery$20,000
• Insurance for Shipping$5,000
• Installation/Calibration$15,000
• On-going support contract$10,000/year
• Routine annual cleaning$2,000/year

3a. For each item, indicate if it is included in the capitalized cost of the machinery. What is the total cost that should be capitalized and depreciated for the machinery?

3b. They placed the order on 5/1/2020, it arrived at the plant on 6/15/2020, they paid the vendor on 6/30/2020, the installation and calibration was complete on 7/10/2020, and it was ready to use on 7/11/2020. What date do they start depreciating the asset?

Montgomery Manufacturing placed a piece of equipment (7 year property) in service on April 1, 2020. Its cost was $2,550,000. It was the only asset placed in service in 2020.

3c.How much 179 expense deduction can they take?

3d. What is the remaining depreciable basis after the 179 elections?

3e. For regular depreciation in 2020, what is the depreciation percentage? What is the regular depreciation is taken in 2020?