Käräne Enterprises, a

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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[The following information applies to the questions displayed below.]
Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2018. In the process
of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2018:
Office furniture
Machinery
Used delivery truck*
*Not considered a luxury automobile.
During 2018, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2019 to
Increase its production capacity. These are the assets acquired during 2019:
Asset
Computers & info. system
Luxury autot
Assembly equipment
Storage building
Asset
Description
2018 Assets
Office furniture
Machinery
Used delivery truck
Totals
2019 Assets
Computers & Info. System
Luxury Auto
Assembly Equipment
Storage Building
Cost
$ 150,000
1,560,000
40,000
tUsed 100% for business purposes.
Karane generated taxable income in 2019 of $1,732,500 for purposes of computing the $179 expense. (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.)
b. Compute the maximum 2019 depreciation deductions, including §179 expense (ignoring bonus depreciation).
Cost
400,000
80,000
1,200,000
700,000
Cost
$
Date Placed in
Service
02/03/2018
07/22/2018
08/17/2018
Date Placed in
Service
03/31/2019
05/26/2019
08/15/2019
11/13/2019
Sec. 179
Expense
MACRS Basis
Current MACRS
Depreciation
Total
Depreciation
Deduction
Transcribed Image Text:Required Information [The following information applies to the questions displayed below.] Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2018. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2018: Office furniture Machinery Used delivery truck* *Not considered a luxury automobile. During 2018, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2019 to Increase its production capacity. These are the assets acquired during 2019: Asset Computers & info. system Luxury autot Assembly equipment Storage building Asset Description 2018 Assets Office furniture Machinery Used delivery truck Totals 2019 Assets Computers & Info. System Luxury Auto Assembly Equipment Storage Building Cost $ 150,000 1,560,000 40,000 tUsed 100% for business purposes. Karane generated taxable income in 2019 of $1,732,500 for purposes of computing the $179 expense. (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.) b. Compute the maximum 2019 depreciation deductions, including §179 expense (ignoring bonus depreciation). Cost 400,000 80,000 1,200,000 700,000 Cost $ Date Placed in Service 02/03/2018 07/22/2018 08/17/2018 Date Placed in Service 03/31/2019 05/26/2019 08/15/2019 11/13/2019 Sec. 179 Expense MACRS Basis Current MACRS Depreciation Total Depreciation Deduction
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