Question

Your research and development for a new piece of equipment is $30,000; then you purchase the...

Your research and development for a new piece of equipment is $30,000; then you purchase the machine for $100,000 and it takes $10,000 to install it. You purchase the machine in Massachusetts, what is your depreciable basis?

a) $100,000

b) $140,000

c) $116,250

d) $146,250

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Answer #1

Answer: b

The depreciable basis of an asset must include the purchase price, installation charge, and research and development cost.

Depreciable basis = Purchase price + Installation charge + Research and development work

                             = 100,000 + 10,000 + 30,000

                             = $140,000 (Answer)

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