Required information Comprehensive Problem 10-77 (LO 10-1, LO 10-2, LO 10-3, LO 10-4, LO 10-5) The following information applies to the questions displayed below.j While

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Required information Comprehensive Problem 10-77 (LO 10-1, LO 10-2, LO 10-3, LO 10-4, LO 10-5) The following information applies to the questions displayed below.j While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees Year 1 Assets Basis Computers (5-year) Office equipment (7-year) Furniture (7-year) Start-up costs Purchase Date October 30, Y1 October 30, Y1 October 30, Y1 October 30, Y1 $15,00e 1e,e00 3,900 17,000 In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $10,000 and the sale was completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full-time after graduation. In the summer, they purchased a small van (for transportation, not considered a luxury auto) and a pinball machine (to help attract new employees). They bought the van on June 15, Y2, for $15,000 and spent $3,000 getting it ready to put into service. The pinball machine cost $4,000 and was placed in service on July 1, Y2 Purchase Date June 1S, Y2 July 1, Y2 April 30, Y2 Year 2 Assets Basis Van $ 18,00e Pinball machine (7-year) Customer list 4,000 16,800 Assume that eSys Answers does not claim any 179 expense or bonus depreciation. (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Comprehensive Problem 10-77 Part a and Part c Required: a. What are the maximum cost recovery deductions for eSys Answers for Y1 and Y2? C. What is eSys Answers's basis in each of its assets at the end of Y2? Complete this question by entering your answers in the tabs below. Req A Req C What are the maximum cost recovery deductions for eSys Answers for Y1 and Y2? Recovery deductions Y 1 Y 2 ReqA ReaC > Required a. What are the maximum cost recovery deductions for eSys Answers for Y1 and Y2? c. What is eSys Answers's basis in each of its assets at the end of Y2? Complete this question by entering your answers in the tabs below. Req A Req C What is eSys Answers's basis in each of its assets at the end of Y2? Adjusted Basis Immediate Original Basis Year 1 Cost Recovery Year 2 Cost Recovery Yr2 Ending Basis Asset Expense Computer Equipment Office Equipment Furniture Start-up costs Van Pinball machine Customer List Totals KReq A Req C TABLE 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period 3-Year 33.33% 44.45 14.81 7.41 5-Year 20.00% 32.00 19.20 11.52 11.52 5.76 Year 7-Year 10-Year 15-Year 20-Year 14.29% 24.49 17.49 12.49 8.93 8.92 8.93 4.46 10.00% 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.56 6.55 3.28 3750370 7.219 6.677 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 2 4 5 6 5.713 5.285 4.888 4.522 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 4.462 4.461 2.231 8 10 12 13 16 18 19 20 TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period Year 7-Year 35.00% 26.00 5.60 11.01 11.01 25.00% 21.43 15.31 10.93 8.75 874 8.75 1.09 TABLE 2b MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period Year 7-Year 25.00% 30.00 18.00 11.37 11.37 17.85% 23.47 6.76 11.97 8.87 8.87 8.87 TABLE 2c MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period Year 1 5.00% 34.00 20.40 12.24 1 1.30 7-Year 10.71% 18.22 9.30 8.86 5.53 ABLE 2d MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period Year 7-Year 3.57% 38.00 22.80 3.68 10.94 9.58 27.55 19.68 14.06 10.04 8.73 8.73 7.64 2-5 667676767676767676767 533333333333333333333 166666666666666666666 0333333333333333333331 6767676767676767676 4666666666666666666663 0333333333333333333331 6676767676767 7676761 766666666666666666666 0333333333333333333331 1667676767676767676768 333333333333333333335 666666666666666666667 1333333333333333333330 667676767676767676765 333333333333333333335 3666666666666666666664 1333333333333333333330 7667676767676767676762 333333333333333333335 666666666666666666661 1333333333333333333330 67676767676767676765 6 733333333333333333338 966666666666666666664 133333333333333333333 67676767676767676762 5 733333333333333333338 266666666666666666661 233333333333333333333 667676767676767676769 4 733333333333333333337 566666666666666666668 233333333333333333332 967676767676767676766 3 733333333333333333337 866666666666666666665 233333333333333333332 67676767676767676763 2 833333333333333333337 166666666666666666662 333333333333333333332 567676767676767676767 I-833333333333333333339 46666666666666666666 01234567890123456789 TABLE 4 Nonresidential Real Property Mid-Month Convention Straight Line-31.5 Years (for assets placed in service before May 13,1993) Month Property Placed in Service 4 6 2.51 3% 3.175 3.175 3.174 2.249% 3.042% 3.175 3.175 3.174 3.175 3.174 3.175 2778% 1.984% 1.720% 1.455% 0.926% 0.661% 0.397% 3.175 3.175 3.175 0.1 32% 3.175 3.175 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.175 12 3.175 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 16 17 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 19 3.174 3.175 3.175 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 3.175 3.174 1.720 3.174 3.175 3.174 3.175 1.984 3.175 3.174 3.175 3.174 2.249 3.175 3.175 0.926 3.175 3.175 3.175 3.175 3.174 3.175 3.174 3.175 3.174 1.455 30 3.174 3.175 3.042 0.397 0.661 TABLE 5 Nonresidential Real Property Mid-Month Convention Straight Line-39 Years (for assets placed in service on or after May 13, 1993 Month Property Placed in Service 4 5 1.605% 2.564 0.963 6 10 12 0.1 07% 2.564 2.461 Year 1.391% 2.564 0.963% 2.564 1605 0.535% 2.564 2.033 0.321% 2.564 2.247 2.461% 2-39 2.564 40 2.247% 2.564 0.321 2.033% 2.564 0.535 1.819% 2.564 0.749 1.177% 2.564 1.391 0.749% 2.564 1.819 0.107