Question
[The following information applies to the questions displayed below.] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2017. In the
[The following information applies to the questions displayed below.]
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2017. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2017:
Asset | Cost | Date Placed in Service | |
Office furniture | $ | 150,000 | 02/03/2017 |
Machinery | 1,560,000 | 07/22/2017 | |
Used delivery truck* | 40,000 | 08/17/2017 | |
|
*Not considered a luxury automobile.
During 2017, Karane was very successful (and had no 179 limitations) and decided to acquire more assets this next year to increase its production capacity. These are the assets acquired during 2018:
Asset | Cost | Date Placed in Service | |
Computers & info. system | $ | 400,000 | 03/31/2018 |
Luxury auto | 80,000 | 05/26/2018 | |
Assembly equipment | 1,200,000 | 08/15/2018 | |
Storage building | 700,000 | 11/13/2018 | |
|
Used 100% for business purposes.
Karane generated taxable income in 2018 of $1,732,500 for purposes of computing the 179 expense. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10.) Assume the 2017 179 limits are the same as those in 2018. (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.)
b. Compute the maximum 2018 depreciation deductions including 179 expense (ignoring bonus depreciation).
c. Compute the maximum 2018 depreciation deductions including 179 expense, but now assume that Karane would like to take bonus depreciation.
d. Now assume that during 2018, Karane decides to buy a competitors assets for a purchase price of $1,350,000. Compute the maximum 2018 cost recovery including 179 expense and bonus depreciation. Karane purchased the following assets for the lump-sum purchase price. (Round your final answers to the nearest whole dollar amount.)
Asset | Cost | Date Placed in Service | |
Inventory | $ | 220,000 | 09/15/2018 |
Office furniture | 230,000 | 09/15/2018 | |
Machinery | 250,000 | 09/15/2018 | |
Patent | 198,000 | 09/15/2018 | |
Goodwill | 2,000 | 09/15/2018 | |
Building | 430,000 | 09/15/2018 | |
Land | 20,000 | 09/15/2018 |
PLEASE PROVIDE CORRECT ANSWERS
Answer is not complete Total Depreciation Deduction Current MACRS Depreciation Sec. 179 Expense MACRS Basis Description Cost 2017 Assets Office furniture Machinery Used delivery truck 2018 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 80,000 10,000 400,000 80,000 1,200,000 700,000 400,000 80,000 1,200,000 700,000 80,000 10,000 240,000 24,920 240,000 24,920 Totals $ 2,380,000 240,000 S 2,380,000 114,920 S 1,262,200 Total Depreciation Current MACRS Sec. 179 Expense Description Cost MACRS Basis Bonus Depreciation Deduction 2017 Assets Office furniture Machinery Used delivery truck 2018 Assets Computers & Info. Systenm Luxury Auto Assembly Equipment Storage Building Totals Total Depreciation Deduction Current Sec. 179 Expense MACRS Basis MACRS Description Cost Bonus Depreciation 2017 Assets Office furniture Machinery Used delivery truck 2018 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building Inventory Office Furniture Machinery Patent Goodwil Building Land Totals Answer is not complete Total Depreciation Deduction Current MACRS Depreciation Sec. 179 Expense MACRS Basis Description Cost 2017 Assets Office furniture Machinery Used delivery truck 2018 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building 80,000 10,000 400,000 80,000 1,200,000 700,000 400,000 80,000 1,200,000 700,000 80,000 10,000 240,000 24,920 240,000 24,920 Totals $ 2,380,000 240,000 S 2,380,000 114,920 S 1,262,200 Total Depreciation Current MACRS Sec. 179 Expense Description Cost MACRS Basis Bonus Depreciation Deduction 2017 Assets Office furniture Machinery Used delivery truck 2018 Assets Computers & Info. Systenm Luxury Auto Assembly Equipment Storage Building Totals Total Depreciation Deduction Current Sec. 179 Expense MACRS Basis MACRS Description Cost Bonus Depreciation 2017 Assets Office furniture Machinery Used delivery truck 2018 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building Inventory Office Furniture Machinery Patent Goodwil Building Land TotalsStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started