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 Cost Date Placed in Service Office furniture $ 250,000 02/03/2020 Machinery 1,580,000 07/22/2020 Used delivery truck* 60,000 08/17/2020 *Not considered a luxury automobile. 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: Asset Date Placed in Service Cost Computers and information system 03/31/2021 420,000 Luxury autot 85,000 05/26/2021 Assembly equipment 1,300,000 08/15/2021 Storage building 800,000 11/13/2021 tUsed 100% for business purposes. Karane generated taxable income in 2021 of $1,757,500 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.) Required: b. Compute the maximum 2021 depreciation deductions, including §179 expense (ignoring bonus depreciation). Current MACRS Total Cost Recovery Deduction Section 179 Description Cost MACRS Basis Expense Depreciation 2020 Assets Office furniture $ 250,000 $ 250,000 1,580,000 60,000 Machinery 158,000 Used delivery truck 60,000 2021 Assets Computers and Information System 420,000 420,000 Luxury Auto Assembly Equipment Storage Building 85,000 85,000 1,300,000 800,000 800,000 800,000 800,000 $ 4,495,000 $ Total 800,000 $ 1,773,000$ 0 $ 800,000
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 Cost Date Placed in Service Office furniture $ 250,000 02/03/2020 Machinery 1,580,000 07/22/2020 Used delivery truck* 60,000 08/17/2020 *Not considered a luxury automobile. 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: Asset Date Placed in Service Cost Computers and information system 03/31/2021 420,000 Luxury autot 85,000 05/26/2021 Assembly equipment 1,300,000 08/15/2021 Storage building 800,000 11/13/2021 tUsed 100% for business purposes. Karane generated taxable income in 2021 of $1,757,500 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.) Required: b. Compute the maximum 2021 depreciation deductions, including §179 expense (ignoring bonus depreciation). Current MACRS Total Cost Recovery Deduction Section 179 Description Cost MACRS Basis Expense Depreciation 2020 Assets Office furniture $ 250,000 $ 250,000 1,580,000 60,000 Machinery 158,000 Used delivery truck 60,000 2021 Assets Computers and Information System 420,000 420,000 Luxury Auto Assembly Equipment Storage Building 85,000 85,000 1,300,000 800,000 800,000 800,000 800,000 $ 4,495,000 $ Total 800,000 $ 1,773,000$ 0 $ 800,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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
Cost
Date Placed in Service
Office furniture
$ 250,000
02/03/2020
Machinery
1,580,000
07/22/2020
Used delivery truck* 60,000
08/17/2020
*Not considered a luxury automobile.
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:
Asset
Cost
Date Placed in
Service
Computers and information
system
03/31/2021
420,000
Luxury autot
85,000
05/26/2021
Assembly equipment
1,300,000
08/15/2021
Storage building
800,000
11/13/2021
tUsed 100% for business purposes.
Karane generated taxable income in 2021 of $1,757,500 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.)
Required:
b. Compute the maximum 2021 depreciation deductions, including §179 expense (ignoring bonus
depreciation).
Total Cost
Recovery
Deduction
Current
Section 179
Description
Cost
MACRS Basis
MACRS
Expense
Depreciation
2020 Assets
Office furniture
$
250,000 $
250,000
Machinery
1,580,000
158,000
Used delivery truck
60,000
60,000
2021 Assets
Computers and Information System
420,000
420,000
Luxury Auto
85,000
85,000
1,300,000
800,000
4,495,000 $
Assembly Equipment
800,000
800,000
800,000
1,773,000 $
Storage Building
Total
2$
800,000 $
800,000
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