76. Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2023. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2023: Asset Office furniture Machinery Used delivery truck* Cost $150,000 1,560,000 40,000 Date Place in Service 02/03 07/22 08/17 *Not considered a luxury automobile. During 2023, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2024 to increase its production capacity. These are the assets acquired during 2024: Asset Cost Date Place in Service Computers & info. system $400,000 03/31 Luxury auto 80,000 05/26 Assembly equipment 1,200,000 08/15 Storage building 700,000 11/13 Used 100% for business purposes. Karane generated taxable income in 2024 of $1,732,500 for purposes of computing the $179 expense limitation. Required a. Compute the maximum 2023 depreciation deductions, including § 179 expense (ignoring bonus depreciation). b. Compute the maximum 2024 depreciation deductions, including §179 expense (ignoring bonus depreciation). c. Compute the maximum 2024 depreciation deductions, including $179 expense, but now assume that Karane would like to take bonus depreciation. d. Now assume that during 2024, Karane decides to buy a competitor's assets for a purchase price of $1,350,000. Compute the maximum 2024 cost recovery, including $179 expense and bonus depreciation. Karane purchased the following assets in 2024 for the lump-sum purchase price. Asset Inventory Office furniture Machinery Patent Goodwill Cost Date Placed in Service $220,000 09/15 230,000 09/15 250,000 09/15 198,000 09/15 2,000 09/15 76. Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2023. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2023: Asset Office furniture Machinery Used delivery truck* Cost $150,000 1,560,000 40,000 Date Place in Service 02/03 07/22 08/17 *Not considered a luxury automobile. During 2023, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2024 to increase its production capacity. These are the assets acquired during 2024: Asset Cost Date Place in Service Computers & info. system $400,000 03/31 Luxury auto 80,000 05/26 Assembly equipment 1,200,000 08/15 Storage building 700,000 11/13 Used 100% for business purposes. Karane generated taxable income in 2024 of $1,732,500 for purposes of computing the $179 expense limitation. Required a. Compute the maximum 2023 depreciation deductions, including § 179 expense (ignoring bonus depreciation). b. Compute the maximum 2024 depreciation deductions, including §179 expense (ignoring bonus depreciation). c. Compute the maximum 2024 depreciation deductions, including $179 expense, but now assume that Karane would like to take bonus depreciation. d. Now assume that during 2024, Karane decides to buy a competitor's assets for a purchase price of $1,350,000. Compute the maximum 2024 cost recovery, including $179 expense and bonus depreciation. Karane purchased the following assets in 2024 for the lump-sum purchase price. Asset Inventory Office furniture Machinery Patent Goodwill Cost Date Placed in Service $220,000 09/15 230,000 09/15 250,000 09/15 198,000 09/15 2,000 09/15

76. Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2023. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2023: Asset Office furniture Machinery Used delivery truck* Cost $150,000 1,560,000 40,000 Date Place in Service 02/03 07/22 08/17 Not considered a luxury automobile. During 2023, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2024 to increase its production capacity. These are the assets acquired during 2024: Asset Cost Date Place in Service Computers & info. system $400,000 03/31 Luxury auto 80,000 05/26 Assembly equipment 1,200,000 08/15 Storage building 700,000 11/13 Used 100% for business purposes. Karane generated taxable income in 2024 of $1,732,500 for purposes of computing the $179 expense limitation. Required a. Compute the maximum 2023 depreciation deductions, including § 179 expense (ignoring bonus depreciation). b. Compute the maximum 2024 depreciation deductions, including §179 expense (ignoring bonus depreciation). c. Compute the maximum 2024 depreciation deductions, including $179 expense, but now assume that Karane would like to take bonus depreciation. d. Now assume that during 2024, Karane decides to buy a competitor's assets for a purchase price of $1,350,000. Compute the maximum 2024 cost recovery, including $179 expense and bonus depreciation. Karane purchased the following assets in 2024 for the lump-sum purchase price. Asset Inventory Office furniture Machinery Patent Goodwill Cost Date Placed in Service $220,000 09/15 230,000 09/15 250,000 09/15 198,000 09/15 2,000 09/15 76. Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2023. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2023: Asset Office furniture Machinery Used delivery truck Cost $150,000 1,560,000 40,000 Date Place in Service 02/03 07/22 08/17 *Not considered a luxury automobile. During 2023, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2024 to increase its production capacity. These are the assets acquired during 2024: Asset Cost Date Place in Service Computers & info. system $400,000 03/31 Luxury auto 80,000 05/26 Assembly equipment 1,200,000 08/15 Storage building 700,000 11/13 Used 100% for business purposes. Karane generated taxable income in 2024 of $1,732,500 for purposes of computing the $179 expense limitation. Required a. Compute the maximum 2023 depreciation deductions, including § 179 expense (ignoring bonus depreciation). b. Compute the maximum 2024 depreciation deductions, including §179 expense (ignoring bonus depreciation). c. Compute the maximum 2024 depreciation deductions, including $179 expense, but now assume that Karane would like to take bonus depreciation. d. Now assume that during 2024, Karane decides to buy a competitor's assets for a purchase price of $1,350,000. Compute the maximum 2024 cost recovery, including $179 expense and bonus depreciation. Karane purchased the following assets in 2024 for the lump-sum purchase price. Asset Inventory Office furniture Machinery Patent Goodwill Cost Date Placed in Service $220,000 09/15 230,000 09/15 250,000 09/15 198,000 09/15 2,000 09/15

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter10: Long-lived Tangible And Intangible Assets

Section: Chapter Questions

Problem 29P

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