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Debra acquired the following new assets during 2018: Date Asset Cost April 11 Furniture $40,000 July...

Debra acquired the following new assets during 2018: Date Asset Cost April 11 Furniture $40,000 July 28 Trucks 40,000 November 3 Computers 70,000 Debra does not elect immediate expensing under § 179. She does not claim any available additional first-year depreciation. If required, round your answers to the nearest dollar.

a. What MACRS convention applies to the assets? Mid-quarte

b. What class of property is each asset for MACRS? Furniture: Seven-year Trucks: Five-year Computers: Five-year

c. The cost recovery deductions for the current year is: Furniture: $ ______Trucks: $_____ Computers: $____

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Answer #1

Solution:-

The mid-quarter convention must be used because the cost of the computers acquired in the 4th quarter exceeds 40% of the cost of all the personal property acquired during the year ($600,000/140,000 = 43%)

Furniture (7-year class)

MACRS cost recovery

($40,000 x .1785)

 8,925

Trucks (5-year class)

MACRS cost recovery

($40,000 x .15)

 4,500

Computers (5-year class)

MACRS cost recovery

($70,000 x .05)

 3,000
Total cost recovery 16,425

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