Question

Azona Corporation (a calendar-year taxpayer) purchased only one business asset during the year, 7-year used property...

Azona Corporation (a calendar-year taxpayer) purchased only one business asset during the year, 7-year used property that cost $2,600,000. Compute Azona’s depreciation for 2017 assuming that bonus depreciation was not elected and

the asset was purchased and placed in service on September 25, 2017.

the asset was purchased and placed in service on October 1, 2017.

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Answer #1
a
Asset was purchased and placed in service on September 25, 2017:
Depreciation is to be calculated using half year convention and 7 years MACRS life
Azona’s depreciation for 2017 = 2600000*14.29%= $371540
b
Asset was purchased and placed in service on October 1, 2017:
Depreciation is to be calculated using mid quarter convention(as more than 40% of total assets was acquired in last quarter) and 7 years MACRS life
Azona’s depreciation for 2017 = 2600000*3.57%= $92820
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