Assume that Timberline Corporation has 2022 taxable income of $246,000 for purposes of computing the §179 expense. It acquired the following assets in 2022: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)AssetPurchase DateBasisFurniture (7-year)December 1$ 432,000Computer equipment (5-year)February 2896,000Copier (5-year)July 1536,000Machinery (7-year)May 22486,000Total $ 1,050,000 What would Timberline's maximum depreciation deduction be for 2022 assuming no bonus depreciation?

A deduction is an item of expense that a company can deduct from the revenue. It reduces the company's taxable income and helps reduce the income tax.As per Section 179, businesses are allowed to take an immediate deduction for business expenses related to depreciable assets such as software, vehicles, and equipment. Depreciation is an expense for the company that's why it's always always in the expenses column of the income statement.A company while filing its income taxes can claim deductions for various expenses incurred to earn this income. One such expense is Depreciation.Depreciation refers to the reduction in the value of an asset due to regular wear and tear. It is basically the cost of using the assets that the company has to account for.As per section 179 deduction is given for a limited number of assets purchased for start up business such as cars, business machinery, computers and office equipment. Deduction is not given for any expenditure on office building furniture and fittings.Computation for Total DepreciationAssetLife under MACRSOriginal BasisSec 179 BasisRemaining BasisMACRS RateDepreciation(a)(b)(c = a -b)(d)(c x d)Furniture7432000043200014.29%$61,733Computer Equipment5$96,00096000$020.00%$0Copier5$36,00036000$020.00%$0Machinery7$486,000486000$01.82%$0$61,733Section 179 expense$618,000Total depreciation including Section 179 $1,050,000$679,733Maximum total depreciation expenses deductible in 2022$ 679,733

Answered: Assume that Timberline Corporation has…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that Timberline Corporation has 2022 taxable income of $246,000 for purposes of computing the §179 expense. It acquired the following assets in 2022: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

Asset	Purchase Date	Basis
Furniture (7-year)	December 1	$ 432,000
Computer equipment (5-year)	February 28	96,000
Copier (5-year)	July 15	36,000
Machinery (7-year)	May 22	486,000
Total		$ 1,050,000

What would Timberline's maximum depreciation deduction be for 2022 assuming no bonus depreciation?

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