Depreciation Problem Groups of 2 allowed. 12 Points At the beginning of 2017, Jo

Question

Depreciation Problem Groups of 2 allowed. 12 Points At the beginning of 2017, Joshua began a calendar year end business and placed in service the following assets during the year. He does not use section 179 or first year (bonus) depreciation. Compute the cost recovery (Depreciation) for the first 2 years of service: Year 1 Year 2 Computer Equipment Office Furniture Truck (not listed property) Commercial Building Residential Rental Property 2/01/17 6/30/17 $170,000 9/30/17 10/11/17 $200,000 4/1/17 $100,000 $40,000 $300,000 8 Points On April 11, 2017 Orange Corporation purchased and placed in service- seven year class assets costing $540,000 and five years class assets costing $140,000. Orange does not use Section 179 Depreciation Orange does take additional first year depreciation (bonus). Assume taxable income is not a limitation. Determine Orange Corporation's 2016 cost recovery. (show work) (no work, no credit)

Explanation / Answer

Date Acquired Year 1 Year 2 Recovery period Qtr Basis A Rate B Dep exp A*B Rate C Dep exp A*C   Computer equipment 1-Feb 5 years 1 100000 20.0% 20000 32.0% 32000   Furniture 30-Jun 7 years 2 170000 14.29% 24293 24.49% 41633 Truck 30-Sep 5 years 3 40000 20.0% 8000 32.0% 12800   Commercial building 11-Oct 39 years 4 200000 0.535% 1070 3.636% 7272 Residential rental property 1-Apr 27.5 years 2 300000 2.567% 7701 2.567% 7701

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