Way Corporation disposed of the following tangible personal property assets in t
ID: 2562223 • Letter: W
Question
Way Corporation disposed of the following tangible personal property assets in the current year. Assume that the delivery truck is not a luxury auto. Calculate Way Corporation’s 2017 depreciation expense (ignore §179 expense and bonus depreciation for this problem).
Asset
Date acquired
Date sold
Convention
Original
Basis
Furniture (7 year)
5/12/13
7/15/17
HY
$50,000
Machinery (7 year)
3/23/14
3/15/17
MQ
$72,000
Delivery truck* (5 year)
9/17/15
3/13/17
HY
$20,000
Machinery (7 year)
10/11/16
8/11/17
MQ
$260,000
Computer (5 year)
10/11/17
12/15/17
HY
$80,000
*Used 100 percent for business.
Asset
Date acquired
Date sold
Convention
Original
Basis
Furniture (7 year)
5/12/13
7/15/17
HY
$50,000
Machinery (7 year)
3/23/14
3/15/17
MQ
$72,000
Delivery truck* (5 year)
9/17/15
3/13/17
HY
$20,000
Machinery (7 year)
10/11/16
8/11/17
MQ
$260,000
Computer (5 year)
10/11/17
12/15/17
HY
$80,000
*Used 100 percent for business.
Explanation / Answer
1 2 3 1*2*3 Asset Original Basis Quarter If midquarter Rate Portion of Year DepreciationExpense Furniture (7 year) $50,000 na 0.089 0.5 2232.5 Machinery (7 year) $72,000 1st 0.109 0.125 984 Delivery truck* (5 year) $20,000 na 0.192 0.5 1920 Machinery (7 year) $260,000 4th 0.276 0.625 44768.75 Computer (5 year) $80,000 na 0 0.5 0* Total dep exp 49905 *No depreciation for assets acquired and disposed of in the same year
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