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Compute the maximum 2021 depreciation deductions, including 5179 expense (ignoring bonus depreciation).

Compute the maximum 2021 depreciation deductions, including 5179 expense (ignoring bonus depreciation).

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 8PB: Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is...
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Asset Office furniture Machinery Used delivery truck. Cost $ 150,000 1,560,000 Date Placed in Service 02/03/2021 07/22/2021 40,000 08/17/2021 "Not considered a luxury automobile. During 2021, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2022 to increase its production capacity. These are the assets acquired during 2022: Asset Cost Computers and information system $400,000 Date Placed in Service 03/31/2022 Luxury auto Assembly equipment Storage building 80,000 05/26/2022 1,200,000 08/15/2022 700,000 11/13/2022 "Used 100% for business purposes. Karane generated taxable income in 2022 of $1,732,500 for purposes of computing the $179 expense limitation. (Use MACRS Table 1. Table 2. Table 3. Table 4. Table 5, and Exhibit 10-10.) Note: Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers. Required: a. Compute the maximum 2021 depreciation deductions, including $179 expense (ignoring bonus depreciation). Description Cost 5179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction Office furniture Machinery $ 150,000 $ 0$ 150,000 $ 21,435 $ 21,435 1,560,000 1,000,000 520,000 80,024 1,080,024 Used delivery truck 40,000 이 40,000 8,000 8,000 Total $ 1,750,000 $1,000,000 $ 710,000 $ 109,459 $ 1,109,459)
Transcribed Image Text:Asset Office furniture Machinery Used delivery truck. Cost $ 150,000 1,560,000 Date Placed in Service 02/03/2021 07/22/2021 40,000 08/17/2021 "Not considered a luxury automobile. During 2021, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2022 to increase its production capacity. These are the assets acquired during 2022: Asset Cost Computers and information system $400,000 Date Placed in Service 03/31/2022 Luxury auto Assembly equipment Storage building 80,000 05/26/2022 1,200,000 08/15/2022 700,000 11/13/2022 "Used 100% for business purposes. Karane generated taxable income in 2022 of $1,732,500 for purposes of computing the $179 expense limitation. (Use MACRS Table 1. Table 2. Table 3. Table 4. Table 5, and Exhibit 10-10.) Note: Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers. Required: a. Compute the maximum 2021 depreciation deductions, including $179 expense (ignoring bonus depreciation). Description Cost 5179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction Office furniture Machinery $ 150,000 $ 0$ 150,000 $ 21,435 $ 21,435 1,560,000 1,000,000 520,000 80,024 1,080,024 Used delivery truck 40,000 이 40,000 8,000 8,000 Total $ 1,750,000 $1,000,000 $ 710,000 $ 109,459 $ 1,109,459)
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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