Cost Office furniture$ 350,000 Machinery 1,760,000 80,000 Asset Used delivery truck* Date Placed in Service 02/03/2022 07/22/2022 08/17/2022 *Not considered a luxury automobile. During 2022, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2023 to increase its production capacity. These are the assets acquired during 2023: Asset Computers and information system Luxury auto* Assembly equipment Storage building *Used 100% for business purposes. Date Placed in Service 03/31/2023 Cost $ 440,000 90,000 05/26/2023 1,400,000 08/15/2023 900,000 11/13/2023
Cost Office furniture$ 350,000 Machinery 1,760,000 80,000 Asset Used delivery truck* Date Placed in Service 02/03/2022 07/22/2022 08/17/2022 *Not considered a luxury automobile. During 2022, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2023 to increase its production capacity. These are the assets acquired during 2023: Asset Computers and information system Luxury auto* Assembly equipment Storage building *Used 100% for business purposes. Date Placed in Service 03/31/2023 Cost $ 440,000 90,000 05/26/2023 1,400,000 08/15/2023 900,000 11/13/2023
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 13E
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Question
![3 of 5
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Required information
[The following information applies to the questions displayed below.]
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2022.
In the process of setting up the business, Karane has acquired various types of assets. Below is a list of
assets acquired during 2022:
Asset
Cost
Office furniture$ 350,000
Machinery
1,760,000
80,000
Used delivery
truck*
*Not considered a luxury automobile.
During 2022, Karane was very successful (and had no §179 limitations) and decided to acquire more assets
in 2023 to increase its production capacity. These are the assets acquired during 2023:
Description
Date
Placed in
Service
02/03/2022
07/22/2022
08/17/2022
Asset
Computers and
information system
Luxury auto*
Assembly equipment
Storage building
*Used 100% for business purposes.
Karane generated taxable income in 2023 of $1,782,500 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.
2022 Assets
Office Furniture
Machinery
Used Delivery Truck
2023 Assets
Computers and Information
System
Cost
$ 440,000
90,000
1,400,000
900,000
Required:
c. Compute the maximum 2023 depreciation deductions, including §179 expense, but now assume that Karane would
like to take bonus depreciation.
Note: Round your final answers to nearest whole dollar.
Luxury Auto
Assembly Equipment
Storage Building
Total
Cost
Date
Placed in
Service
03/31/2023
05/26/2023
08/15/2023
11/13/2023
Section
179
Expense
$ 350,000 $
1,760,000
80,000
or $
0
0
440,000
90,000
1,400,000 1,160,000
900,000
0
0
0
Bonus
$
$
5,020,000 1,160,000
MACRS
Basis
0
0
0 $ 350,000
0
0
$ 85,715 $ 85,715
680,000 166,532 166,532
80,000 25,600
25,600
88,000
Current Total Cost
MACRS
Recovery
Depreciation Deduction
$
1,198,000
12,200
$ 290,047
0
12,200
1,160,000
0
$
1,450,047](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F88d58072-3e9b-4088-8b28-3017e57b13e0%2F152a1fa2-1646-4ddc-9e26-3a4f92630f01%2Fzleil4k_processed.png&w=3840&q=75)
Transcribed Image Text:3 of 5
ok
I
ht
ences
!
Required information
[The following information applies to the questions displayed below.]
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2022.
In the process of setting up the business, Karane has acquired various types of assets. Below is a list of
assets acquired during 2022:
Asset
Cost
Office furniture$ 350,000
Machinery
1,760,000
80,000
Used delivery
truck*
*Not considered a luxury automobile.
During 2022, Karane was very successful (and had no §179 limitations) and decided to acquire more assets
in 2023 to increase its production capacity. These are the assets acquired during 2023:
Description
Date
Placed in
Service
02/03/2022
07/22/2022
08/17/2022
Asset
Computers and
information system
Luxury auto*
Assembly equipment
Storage building
*Used 100% for business purposes.
Karane generated taxable income in 2023 of $1,782,500 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.
2022 Assets
Office Furniture
Machinery
Used Delivery Truck
2023 Assets
Computers and Information
System
Cost
$ 440,000
90,000
1,400,000
900,000
Required:
c. Compute the maximum 2023 depreciation deductions, including §179 expense, but now assume that Karane would
like to take bonus depreciation.
Note: Round your final answers to nearest whole dollar.
Luxury Auto
Assembly Equipment
Storage Building
Total
Cost
Date
Placed in
Service
03/31/2023
05/26/2023
08/15/2023
11/13/2023
Section
179
Expense
$ 350,000 $
1,760,000
80,000
or $
0
0
440,000
90,000
1,400,000 1,160,000
900,000
0
0
0
Bonus
$
$
5,020,000 1,160,000
MACRS
Basis
0
0
0 $ 350,000
0
0
$ 85,715 $ 85,715
680,000 166,532 166,532
80,000 25,600
25,600
88,000
Current Total Cost
MACRS
Recovery
Depreciation Deduction
$
1,198,000
12,200
$ 290,047
0
12,200
1,160,000
0
$
1,450,047
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