Question

Seven-year property costing $75,000 was placed in service on July 7 of the current year. The property has no salvage value and is depreciated using straight-line. Assuming the company elects not to take advantage of either bonus depreciation or the Code Sec. 179 deduction and the mid-quarter convention applies to all seven-year property placed in service this year, what will be depreciation expense with regard to this property for the current year?

Group of answer choices

$10,714

$4,018

$5,357

None of the above

Answer 1

Question

Answer :   $ 4018

under the mid quater convention in the first quarter the dereciation is charged half amount of quarter depreciation and in the last quarter also depreciation  is charged half amount of last quarter depreciation under the mid quarter convention.

Straight Line Depreciation Method= ( Cost - residual value)/useful life
For the Ist quarter dereciation =( (75000-0)/7 /12))*1.5
		=	10715/12 *1.5
		=	1339
		=	$1339
For the 2nd quarter dereciation =( (75000-0)/7 /12))*3
		=	10714/12*3
		=	2678.5
		=	$2679
total dereciation for the current year	=	$1339+$2679
				=	4018
				=	$4018