Question

Problem 8-9 (Algorithmic)
Modified Accelerated Cost Recovery System (MACRS), Listed Property (LO 8.2, 8.4)

On February 2, 2018, Alexandra purchases a personal computer for her home. The computer cost $5,640. Alexandra uses the computer 80 percent of the time in her accounting business, and the remaining 20 percent of the time for various personal uses. Calculate Alexandra's maximum depreciation deduction for 2018 for the computer, assuming half-year convention and she does not make the election to expense or take bonus depreciation.

Click here to access the depreciation table.

If required, round your answer to nearest dollar.
$

Answer 1

ANSWER

Since 80% time of the computer is for business / professional purpose, 5 years MACRS will be applicable here.

5 year MACRS depreciation table :

1st year - 20%

2nd year - 32%

3rd year - 19.2%

4th year - 11.52%

5th year - 11.52%

6th year - 5.76%

So 1st year depreciation is 20%

So Max depreciation for 2018 = 5,640* 0.8 * 0.2 = $902.4

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