DLW Corporation acquired and placed in service the following assets during the y
ID: 2485029 • Letter: D
Question
DLW Corporation acquired and placed in service the following assets during the year: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Asset Date Acquired Cost Basis
Computer equipment 2/27 $ 9,500
Furniture 4/26 17,700
Commercial building 9/1 338,000.
Assuming DLW does not elect §179 expensing or bonus depreciation, answer the following questions
1- What is DLW's year 1 cost recovery for each asset? (Round your answers to the nearest dollar amount.)
2-What is DLW's year 3 cost recovery for each asset if DLW sells all of these assets on 4/1 of year 3? (Round your answers to the nearest dollar amount.)
Explanation / Answer
Solution:
1)
Asset
Purchase date
Quarter
Recovery period
Original basis (1)
Rate (2)
Depreciation (1) x (2)
Computer Equipment
27 – Feb
1st
5
$9,500
20%
$1,900
Furniture
26-Apr
2nd
7
17,700
14.29%
$2,529.33
Building
1-Sept
3rd
39
338,000
0.321%
$1,084.98
$5,514
2)
Asset
Recovery period
Original basis
Rate
Portion of year
Depreciation expense
Computer Equipment
5
$9,500
19.2%
50%
$912
Furniture
7
17,700
17.49%
50%
$1,547.87
Building
39
338,000
2.564%
4.17%
$361.39
$2,821
Asset
Purchase date
Quarter
Recovery period
Original basis (1)
Rate (2)
Depreciation (1) x (2)
Computer Equipment
27 – Feb
1st
5
$9,500
20%
$1,900
Furniture
26-Apr
2nd
7
17,700
14.29%
$2,529.33
Building
1-Sept
3rd
39
338,000
0.321%
$1,084.98
$5,514
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