Asanco Corporation acquired and placed in service the following assets during the year: Asset Date Acquired Cost Basis Building 12/4 $350,000 Computer Equipment 3/2 $40,000 Furniture 4/15 $38,000 Assume that Asanco does not elect §179 expensing and elects not to use bonus depreciation. Answer the following questions. What is Asanco’s first year cost recovery for each asset? Use the format below. Asset Acquisition Date Quarter Recovery Period Original Basis Rate Depreciation Expense What is Asanco’s year 3 cost recovery for each asset if it sells all of these assets on January 10th of year 3? Use the format below. Asset Original Basis Recovery Period Rate Portion of Year Depreciation Expense
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
- Asanco Corporation acquired and placed in service the following assets during the year:
|
Asset |
Date Acquired |
Cost Basis |
|
Building |
12/4 |
$350,000 |
|
Computer Equipment |
3/2 |
$40,000 |
|
Furniture |
4/15 |
$38,000 |
Assume that Asanco does not elect §179 expensing and elects not to use bonus
- What is Asanco’s first year cost recovery for each asset? Use the format below.
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Asset |
Acquisition Date |
Quarter |
Recovery Period |
Original Basis |
Rate |
Depreciation Expense |
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- What is Asanco’s year 3 cost recovery for each asset if it sells all of these assets on January 10th of year 3? Use the format below.
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Asset |
Original Basis |
Recovery Period |
Rate |
Portion of Year |
Depreciation Expense |
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