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Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Asset Office furniture Machinery Cost $ 150,000 1,560,000 40,000 Used delivery truck* *Not considered a luxury automobile. Asset Date Placed in Service 02/03/2020 07/22/2020 08/17/2020 During 2020, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021: Cost $ 400,000 80,000 Date Placed in Service 03/31/2021 Computers and information system Luxury autot Assembly equipment Storage building †Used 100% for business purposes. Karane generated taxable income in 2021 of $1,732,500 for purposes of computing the §179 expense limitation. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10) (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.) 1,200,000 700,000 05/26/2021 08/15/2021 11/13/2021

Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Asset Office furniture Machinery Cost $ 150,000 1,560,000 40,000 Used delivery truck* *Not considered a luxury automobile. Asset Date Placed in Service 02/03/2020 07/22/2020 08/17/2020 During 2020, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021: Cost $ 400,000 80,000 Date Placed in Service 03/31/2021 Computers and information system Luxury autot Assembly equipment Storage building †Used 100% for business purposes. Karane generated taxable income in 2021 of $1,732,500 for purposes of computing the §179 expense limitation. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10) (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.) 1,200,000 700,000 05/26/2021 08/15/2021 11/13/2021

FINANCIAL ACCOUNTING
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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Required: b. Compute the maximum 2021 depreciation deductions, including §179 expense (ignoring bonus depreciation). Description 2020 Assets Office furniture Machinery Used delivery truck 2021 Assets Computers and Information System Luxury Auto Assembly Equipment Storage Building Total Answer is complete but not entirely correct. Current MACRS Depreciation Cost $ 150,000 $ 1,560,000✔ 40,000✔ 400,000✔ 80,000✔ 1,200,000✔ 700,000✔ $ 4,130,000 Section 179 Expense 0 $ 0✔ 0 0✔ 0✓ 1,050,000 ✓ 0✓ MACRS Basis 150,000 $ 560,000 40,000 400,000 80,000✔ 150,000 700,000 › › › › $ 1,050,000 $ 2,080,000 $ 36,735 $ 36,735 80,024 X 80,024 12,800✔ 12,800 80,000✔ 10,000 X 21,435✓ 2,247✔ Total Cost Recovery Deduction 243,241 80,000 10,000 1,071,435 2,247 $ 1,293,241
Transcribed Image Text:Required: b. Compute the maximum 2021 depreciation deductions, including §179 expense (ignoring bonus depreciation). Description 2020 Assets Office furniture Machinery Used delivery truck 2021 Assets Computers and Information System Luxury Auto Assembly Equipment Storage Building Total Answer is complete but not entirely correct. Current MACRS Depreciation Cost $ 150,000 $ 1,560,000✔ 40,000✔ 400,000✔ 80,000✔ 1,200,000✔ 700,000✔ $ 4,130,000 Section 179 Expense 0 $ 0✔ 0 0✔ 0✓ 1,050,000 ✓ 0✓ MACRS Basis 150,000 $ 560,000 40,000 400,000 80,000✔ 150,000 700,000 › › › › $ 1,050,000 $ 2,080,000 $ 36,735 $ 36,735 80,024 X 80,024 12,800✔ 12,800 80,000✔ 10,000 X 21,435✓ 2,247✔ Total Cost Recovery Deduction 243,241 80,000 10,000 1,071,435 2,247 $ 1,293,241
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Asset Office furniture Machinery Cost $ 150,000 1,560,000 40,000 Used delivery truck* *Not considered a luxury automobile. Asset Date Placed in Service 02/03/2020 07/22/2020 08/17/2020 During 2020, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021: Cost $ 400,000 80,000 Date Placed in Service 03/31/2021 05/26/2021 Computers and information system Luxury autot Assembly equipment Storage building tUsed 100% for business purposes. Karane generated taxable income in 2021 of $1,732,500 for purposes of computing the §179 expense limitation. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10) (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.) 1,200,000 700,000 08/15/2021 11/13/2021
Transcribed Image Text:Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020: Asset Office furniture Machinery Cost $ 150,000 1,560,000 40,000 Used delivery truck* *Not considered a luxury automobile. Asset Date Placed in Service 02/03/2020 07/22/2020 08/17/2020 During 2020, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2021 to increase its production capacity. These are the assets acquired during 2021: Cost $ 400,000 80,000 Date Placed in Service 03/31/2021 05/26/2021 Computers and information system Luxury autot Assembly equipment Storage building tUsed 100% for business purposes. Karane generated taxable income in 2021 of $1,732,500 for purposes of computing the §179 expense limitation. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10) (Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers.) 1,200,000 700,000 08/15/2021 11/13/2021
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