Harris Corporation is a technology start-up in its second year of operations. The company didn’t purchase any assets this year but purchased the following assets in the prior year: Asset Placed in Service Basis Office equipment August 14 $ 10,400 Manufacturing equipment April 15 72,000 Computer system June 1 20,000 Total $ 102,400 Harris did not know depreciation was tax deductible until it hired an accountant this year and didn’t claim any depreciation deduction in its first year of operation. (Use MACRS Table 1 and Table 2.)
Harris Corporation is a technology start-up in its second year of operations. The company didn’t purchase any assets this year but purchased the following assets in the prior year: Asset Placed in Service Basis Office equipment August 14 $ 10,400 Manufacturing equipment April 15 72,000 Computer system June 1 20,000 Total $ 102,400 Harris did not know depreciation was tax deductible until it hired an accountant this year and didn’t claim any depreciation deduction in its first year of operation. (Use MACRS Table 1 and Table 2.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Harris Corporation is a technology start-up in its second year of operations. The company didn’t purchase any assets this year but purchased the following assets in the prior year:
| Asset | Placed in Service | Basis |
|---|---|---|
| Office equipment | August 14 | $ 10,400 |
| Manufacturing equipment | April 15 | 72,000 |
| Computer system | June 1 | 20,000 |
| Total | $ 102,400 |
Harris did not know
Problem 10-55 Part a (Algo)
a. What is the maximum amount of depreciation deduction Harris Corporation can deduct in its second year of operation? (Leave no answer blank. Enter zero if applicable.)
Transcribed Image Text:**Table 1: MACRS Half-Year Convention**
This table provides the depreciation rates for various recovery periods under the Modified Accelerated Cost Recovery System (MACRS), using the half-year convention. MACRS is a method of depreciation in the United States that permits faster asset depreciation by accelerating deductions over a specified period.
**Depreciation Rates for Recovery Periods:**
- **3-Year Recovery Period:**
- Year 1: 33.33%
- Year 2: 44.45%
- Year 3: 14.81%
- Year 4: 7.41%
- **5-Year Recovery Period:**
- Year 1: 20.00%
- Year 2: 32.00%
- Year 3: 19.20%
- Year 4: 11.52%
- Year 5: 11.52%
- Year 6: 5.76%
- **7-Year Recovery Period:**
- Year 1: 14.29%
- Year 2: 24.49%
- Year 3: 17.49%
- Year 4: 12.49%
- Year 5: 8.93%
- Year 6: 8.92%
- Year 7: 8.93%
- Year 8: 4.46%
- **10-Year Recovery Period:**
- Year 1: 10.00%
- Year 2: 18.00%
- Year 3: 14.40%
- Year 4: 11.52%
- Year 5: 9.22%
- Year 6: 7.37%
- Year 7: 6.55%
- Year 8: 6.55%
- Year 9: 6.56%
- Year 10: 6.55%
- Year 11: 3.28%
- **15-Year Recovery Period:**
- Year 1: 5.00%
- Year 2: 9.50%
- Year 3: 8.55%
- Year 4: 7.70%
- Year 5: 6.93%
- Year 6: 6.23%
Transcribed Image Text:**TABLE 2a MACRS Mid-Quarter Convention:** *For property placed in service during the first quarter*
| Year | 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*
| Year | Depreciation Rate for Recovery Period |
|-------|--------------------------------------|
| | 5-Year | 7-Year |
| Year 1| 30.00% | 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 | 8.74 |
| Year 7| | 8.87 |
| Year 8| | 3.34 |
**TABLE 2c MACRS Mid-Quarter Convention:** *For property placed in service during the third quarter*
| Year | 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.
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