Evergreen Corporation (calendar year-end) acquired the following assets during the current year: (Use MACRS Table 1 and Table 2.) Asset Date Placed in Service Original Basis Machinery October 25 $ 90,000 Computer equipment February 3 25,000 Used delivery truck* August 17 38,000 Furniture April 22 175,000 *The delivery truck is not a luxury automobile. b. What is the allowable depreciation on Evergreen’s property in the current year if Evergreen does not elect out of bonus depreciation?
Evergreen Corporation (calendar year-end) acquired the following assets during the current year: (Use MACRS Table 1 and Table 2.) Asset Date Placed in Service Original Basis Machinery October 25 $ 90,000 Computer equipment February 3 25,000 Used delivery truck* August 17 38,000 Furniture April 22 175,000 *The delivery truck is not a luxury automobile. b. What is the allowable depreciation on Evergreen’s property in the current year if Evergreen does not elect out of bonus depreciation?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
Evergreen Corporation (calendar year-end) acquired the following assets during the current year: (Use MACRS Table 1 and Table 2.)
| Asset | Date Placed in Service | Original Basis |
|---|---|---|
| Machinery | October 25 | $ 90,000 |
| Computer equipment | February 3 | 25,000 |
| Used delivery truck* | August 17 | 38,000 |
| Furniture | April 22 | 175,000 |
*The delivery truck is not a luxury automobile.
b. What is the allowable
Transcribed Image Text:Table 1 MACRS Half-Year Convention
Depreciation Rate for Recovery Period
3-Year
5-Year
7-Year
10-Year
15-Year
20-Year
Year 1
33.33%
20.00%
14.29%
10.00%
5.00%
3.750%
Year 2
44.45
32.00
24.49
18.00
9.50
7.219
Year 3
14.81
19.20
17.49
14.40
8.55
6.677
Year 4
7.41
11.52
12.49
11.52
7.70
6.177
Year 5
11.52
8.93
9.22
6.93
5.713
Year 6
5.76
8.92
7.37
6.23
5.285
Year 7
8.93
6.55
5.90
4.888
Year 8
4.46
6.55
5.90
4.522
Year 9
6.56
5.91
4.462
Year 10
6.55
5.90
4.461
Year 11
3.28
5.91
4.462
Year 12
5.90
4.461
Year 13
5.91
4.462
Year 14
5.90
4.461
Year 15
5.91
4.462
Year 16
2.95
4.461
Year 17
4.462
Year 18
4.461
Year 19
4.462
Year 20
4.461
Year 21
2.231
Transcribed Image Text:TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter
Depreciation Rate for Recovery Period
5-Year
7-Year
Year 1
35.00%
25.00%
Year 2
26.00
21.43
Year 3
15.60
15.31
Year 4
11.01
10.93
Year 5
11.01
8.75
Year 6
1.38
8.74
Year 7
8.75
Year 8
1.09
TABLE 2b MACRS Mid-Quarter Convention: For property placed in service during the second quarter
Depreciation Rate for Recovery Period
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 MACRS Mid-Quarter Convention: For property placed in service during the third quarter
Depreciation Rate for Recovery Period
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 MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter
Depreciation Rate for Recovery Period
5-Year
7-Year
Year 1
5.00%
3.57%
Year 2
38.00
27.55
Year 3
22.80
19.68
Year 4
13.68
14.06
Year 5
10.94
10.04
Year 6
9.58
8.73
Year 7
8.73
Year 8
7.64
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education