Problem 10-65 (LO 10-3)

[The following information applies to the questions displayed below.]

Phil owns a ranch business and uses four-wheelers to do much of his work. Occasionally, though, he and his boys will go for a ride together as a family activity. During year 1, Phil put 1,090 miles on the four-wheeler that he bought on January 15 for $9,800. Of the miles driven, only 240 miles were for personal use. Assume four-wheelers qualify to be depreciated according to the five-year MACRS schedule and the four-wheeler was the only asset Phil purchased this year. (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.)

Problem 10-65 Part-a

a. Calculate the allowable depreciation for year 1 (ignore the 179 expense and bonus depreciation).

b. Calculate the allowable depreciation for year 2 if total miles were 1,505 and personal use miles were 555 (ignore the 179 expense and bonus depreciation).