Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2021. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2021: Asset Office furniture Machinery Used delivery truck* Cost Date Placed in Service $310,000 1,592,000 72,000 02/03/2021 07/22/2021 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 Computers and information system Luxury auto* Assembly equipment Storage building Cost $ 432,000 Date Placed in Service 03/31/2022 88,000 1,360,000 800,000 05/26/2022 08/15/2022 11/13/2022 "Used 100% for business purposes. Karane generated taxable Income in 2022 of $1,772,500 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: c. Compute the maximum 2022 depreciation deductions, including $179 expense, but now assume that Karane would like to take bonus depreciation.
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2021. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2021: Asset Office furniture Machinery Used delivery truck* Cost Date Placed in Service $310,000 1,592,000 72,000 02/03/2021 07/22/2021 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 Computers and information system Luxury auto* Assembly equipment Storage building Cost $ 432,000 Date Placed in Service 03/31/2022 88,000 1,360,000 800,000 05/26/2022 08/15/2022 11/13/2022 "Used 100% for business purposes. Karane generated taxable Income in 2022 of $1,772,500 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: c. Compute the maximum 2022 depreciation deductions, including $179 expense, but now assume that Karane would like to take bonus depreciation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2021. In the process
of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2021:
Cost
Date Placed in
Service
02/03/2021
Asset
Office furniture
Machinery
Used delivery truck*
$ 310,000
1,592,000
72,000
07/22/2021
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
Computers and information system
Cost
$ 432,000
Date Placed in
Service
Luxury auto⭑
Assembly equipment
Storage building
*Used 100% for business purposes.
03/31/2022
88,000
1,360,000
800,000
05/26/2022
08/15/2022
11/13/2022
Karane generated taxable Income in 2022 of $1,772,500 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:
c. Compute the maximum 2022 depreciation deductions, including $179 expense, but now assume that Karane would like to take
bonus depreciation.
Description
2021 Assets
Office Furniture
Machinery
Used Delivery Truck
2022 Assets
Computers and Information System
Luxury Auto
Assembly Equipment
Storage Building
Total
Cost
Section 179
Expense
Bonus
MACRS Basis
Current
MACRS
Depreciation
Total Cost
Recovery
Deduction
$ 310,000 $
0
$
0
$
1,592,000
1,080,000
0
72,000
0
0
310,000
512,000
72,000
$
77,500 $
77,500
54,835
10,800
54,835
10,800
432,000
0
432,000
0
0
432,000
88,000
0
8,000
80,000
8,000
1,360,000
0
800,000
0
$ 4,654,000 $ 1,080,000 $
440,000
$
974,000 $
143,135 $
583,135
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