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Clay LLC placed in service machinery and equipment (seven-year property) with a basis of $3,480,000 on June 6, 2023. Assume that Clay has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (ignoring any possible bonus depreciation). (Use MACRS Table 1.) $1,160,000 $497,292 $924,375 $985,839 None of the choices are correct.

Clay LLC placed in service machinery and equipment (seven-year property) with a basis of $3,480,000 on June 6, 2023. Assume that Clay has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (ignoring any possible bonus depreciation). (Use MACRS Table 1.) $1,160,000 $497,292 $924,375 $985,839 None of the choices are correct.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Clay LLC placed in service machinery and equipment (seven-year property) with a basis of $3,480,000 on June 6, 2023. Assume that Clay has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (ignoring any possible bonus depreciation). (Use MACRS Table 1.)

$1,160,000

$497,292

$924,375

$985,839

None of the choices are correct.

 

Table 1 MACRS Half-Year Convention Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Depreciation Rate for Recovery Period 3-Year 5-Year 33.33% 20.00% 44.45 32.00 14.81 19.20 7.41 11.52 11.52 5.76 7-Year 10-Year 15-Year 20-Year 14.29% 10.00% 5.00% 3.750% 24.49 18.00 9.50 7.219 17.49 14.40 8.55 6.677 12.49 11.52 7.70 6.177 8.93 9.22 6.93 5.713 8.92 7.37 6.23 5.285 8.93 6.55 5.90 4.888 4.46 6.55 5.90 4.522 6.56 5.91 4.462 6.55 5.90 4.461 3.28 5.91 4.462 5.90 4.461 5.91 4.462 5.90 4.461 5.91 4.462 2.95 4.461 4.462 4.461 4.462 4.461 2.231
Transcribed Image Text:Table 1 MACRS Half-Year Convention Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Depreciation Rate for Recovery Period 3-Year 5-Year 33.33% 20.00% 44.45 32.00 14.81 19.20 7.41 11.52 11.52 5.76 7-Year 10-Year 15-Year 20-Year 14.29% 10.00% 5.00% 3.750% 24.49 18.00 9.50 7.219 17.49 14.40 8.55 6.677 12.49 11.52 7.70 6.177 8.93 9.22 6.93 5.713 8.92 7.37 6.23 5.285 8.93 6.55 5.90 4.888 4.46 6.55 5.90 4.522 6.56 5.91 4.462 6.55 5.90 4.461 3.28 5.91 4.462 5.90 4.461 5.91 4.462 5.90 4.461 5.91 4.462 2.95 4.461 4.462 4.461 4.462 4.461 2.231
EXHIBIT 10-10 Automobile Depreciation Limits Recovery Year 2023 12,200** 19,500 2020 10,100** 16,100 9,700 5,760 **$8,000 additional depreciation is allowed when bonus depreciation is claimed [§168(k)(2)(F)]. 1 2 3 4 and after Year Placed in Service 2021 10,200** 16,400 9,800 5,860 11,700 6,960 2022 11,200** 18,000 10,800 6,460
Transcribed Image Text:EXHIBIT 10-10 Automobile Depreciation Limits Recovery Year 2023 12,200** 19,500 2020 10,100** 16,100 9,700 5,760 **$8,000 additional depreciation is allowed when bonus depreciation is claimed [§168(k)(2)(F)]. 1 2 3 4 and after Year Placed in Service 2021 10,200** 16,400 9,800 5,860 11,700 6,960 2022 11,200** 18,000 10,800 6,460
Expert Solution
Step 1: Introduction of Depreciation and MACRS

Depreciation (reduction in the value of an asset) expense is the amount that a company's assets depreciate for a period.

The asset in the question is machinery and equipment

The machinery and equipment life is 7 years.

As per Section 179, the maximum allowable deduction expense for 2023 is $1,160,000 

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