Question
The Gladys Corporation buys office equipment costing $1,074,000 on May 12, 2018. In 2021, new and improved models of the equipment make it obsolete, and
The Gladys Corporation buys office equipment costing $1,074,000 on May 12, 2018. In 2021, new and improved models of the equipment make it obsolete, and Gladys sells the old equipment for $34,000 on December 27, 2021.
Refer to the MACRS Depreciation Tables to answer the following questions.
Note: Do not round any division. Round computed yearly depreciation amounts to the nearest whole dollar.
Hint: Don't forget about mid-year convention in the year of disposal when calculating depreciation.
a. Assuming that Gladys takes the maximum cost-recovery deduction allowable on the equipment (7 year recovery period), but does not want to claim bonus depreciation, the Corporation would have a gain of $ on the sale.
b. Assuming that Gladys takes the minimum cost-recovery deduction allowable on the equipment (10 year recovery period), the Corporation would have a loss of $ on the sale.
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