Lina purchased a new car for use in her business during 2021. The auto was the only business asset she purchased during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2021 and 2022 (Lina doesn’t want to take bonus depreciation for 2021 or 2022) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.)e. The vehicle cost $92,000, and she used it 20 percent for business.| Year | Depreciation deduction ||------|-------------------------|| 2021 | || 2022 | | ### Depreciation Rates Using MACRS Mid-Quarter Convention#### Table 2a: For Property Placed in Service During the First Quarter| Year | 5-Year | 7-Year ||------|--------|--------|| Year 1 | - | - || Year 2 | - | - || Year 3 | - | - || Year 4 | - | - || Year 5 | - | - || Year 6 | - | - || Year 7 | - | - || Year 8 | - | - |(Note: This table is mentioned but not shown in the image.)#### Table 2b: For Property Placed in Service During the Second Quarter| Year | 5-Year | 7-Year ||--------|--------|--------|| Year 1 | 25.00% | 17.85% || Year 2 | 30.00 | 23.47 || Year 3 | 18.00 | 16.76 || Year 4 | 11.37 | 11.97 || Year 5 | 11.37 | 8.87 || Year 6 | 4.26 | 8.87 || Year 7 | - | 8.87 || Year 8 | - | 3.34 |#### Table 2c: For Property Placed in Service During the Third Quarter| Year | 5-Year | 7-Year ||--------|--------|--------|| Year 1 | 15.00% | 10.71% || Year 2 | 34.00 | 25.51 || Year 3 | 20.40 | 18.22 || Year 4 | 12.24 | 13.02 || Year 5 | 11.30 | 9.30 || Year 6 | 7.06 | 8.85 || Year 7 | - | 8.86 || Year 8 | - | 5.53 |#### Table 2d: For Property Placed in Service During the Fourth Quarter| Year | 5-Year | 7-Year ||--------|--------|--------

As MACRS, GDS recovery period for vehicle is 5 year We will use half year convention Half year convention rate are :-20% for first year and 32% for second yearIf vehicle gross loading capacity is less than 6000 pounds then luxury cap limit is applied. Under luxury cap limit maximum depreciation claimed in first year is 10200 and in 2nd year 16400 We assume above vehicle is luxury vehicle.

Answered: erwise) for the automobile in 202 ving…

Business

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erwise) for the automobile in 202 ving alternative scenarios (assum

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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Concept explainers

Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.

Question

Lina purchased a new car for use in her business during 2021. The auto was the only business asset she purchased during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2021 and 2022 (Lina doesn’t want to take bonus depreciation for 2021 or 2022) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1, Table 2, and Exhibit 10-10.)

e. The vehicle cost $92,000, and she used it 20 percent for business.

| Year | Depreciation deduction |
|------|-------------------------|
| 2021 | |
| 2022 | |

### Depreciation Rates Using MACRS Mid-Quarter Convention

#### Table 2a: For Property Placed in Service During the First Quarter

| Year | 5-Year | 7-Year |
|------|--------|--------|
| Year 1 | - | - |
| Year 2 | - | - |
| Year 3 | - | - |
| Year 4 | - | - |
| Year 5 | - | - |
| Year 6 | - | - |
| Year 7 | - | - |
| Year 8 | - | - |

(Note: This table is mentioned but not shown in the image.)

#### Table 2b: For Property Placed in Service During the Second Quarter

| Year | 5-Year | 7-Year |
|--------|--------|--------|
| Year 1 | 25.00% | 17.85% |
| Year 2 | 30.00 | 23.47 |
| Year 3 | 18.00 | 16.76 |
| Year 4 | 11.37 | 11.97 |
| Year 5 | 11.37 | 8.87 |
| Year 6 | 4.26 | 8.87 |
| Year 7 | - | 8.87 |
| Year 8 | - | 3.34 |

#### Table 2c: For Property Placed in Service During the Third Quarter

| Year | 5-Year | 7-Year |
|--------|--------|--------|
| Year 1 | 15.00% | 10.71% |
| Year 2 | 34.00 | 25.51 |
| Year 3 | 20.40 | 18.22 |
| Year 4 | 12.24 | 13.02 |
| Year 5 | 11.30 | 9.30 |
| Year 6 | 7.06 | 8.85 |
| Year 7 | - | 8.86 |
| Year 8 | - | 5.53 |

#### Table 2d: For Property Placed in Service During the Fourth Quarter

| Year | 5-Year | 7-Year |
|--------|--------|--------

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