On April 5, 2021, Kinsey places in service a new passenger automobile that cost $60,000. The car is used 100% for business in each ta: year. Kinsey uses the MACRS 200% declining-balance method of cost recovery (the auto is a 5-year asset). Assume Kinsey elects any available additional first-year depreciation. The maximum depreciation allowed for 2021 is $ 10000 and for 2022 is $16000

On April 5, 2021, Kinsey places in service a new passenger automobile that cost $60,000. The car is used 100% for business in each ta: year. Kinsey uses the MACRS 200% declining-balance method of cost recovery (the auto is a 5-year asset). Assume Kinsey elects any available additional first-year depreciation. The maximum depreciation allowed for 2021 is $ 10000 and for 2022 is $16000

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 27CE

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On January 1, 2020, Bonita Industries purchased a machine costing $358000. The machine is in the MACRS 5-year recovery class for tax purposes and has an estimated $67000 salvage value at the end of its economic life. It's based on half year convention. Assuming the company uses the general MACRS approach, the amount of MACRS deduction for tax purposes for the year 2020 is MACRS Depreciation Rates by Class of Property 3-year (200% DB) 7-year (200% DB) 15-year (150% DB) 20-year (150% DB) Recovery 5-year (200% DB) 10-year (200% DB) Year 1 33.33 20.00 14.29 10.00 5.00 3.750 2. 44.45 32.00 24.49 18.00 9.50 7.219 14.81* 19.20 17.49 14.40 8.55 6.677 11.52* 11.52 12.49 8.93* 4......... 7.41 11.52 7.70 6.177 5 9.22 6.93 5.713 6.... 5.76 8.92 7.37 6.23 5.285 8.93 6.55* 5.90* 4.888 8. 4.46 6.55 5.90 4.522 6.56 5.91 4.462 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 18 4.461 19 4.462 20 4.461 21 2.231 *switchover to…
On January 1, 2020, Coronado Industries purchased a machine costing $346000. The machine is in the MACRS 5-year recovery class for tax purposes and has an estimated $71000 salvage value at the end of its economic life. It's based on half year convention.Assuming the company uses the general MACRS approach, the amount of MACRS deduction for tax purposes for the year 2020 is
On January 1, 2020, Bonita Industries purchased a machine costing $358000. The machine is in the MACRS 5-year recovery class for tax purposes and has an estimated $67000 salvage value at the end of its economic life. It's based on half year convention.Assuming the company uses the general MACRS approach, the amount of MACRS deduction for tax purposes for the year 2020 is $58200. $143200. $71600. $114560.
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Futabatei Enterprises purchased a delivery truck on January 1, 2020, at a cost of $27,000. The truck has a useful life of 7 years with an estimated salvage value of $6,000. The straight-line method is used for book purposes. For tax purposes, the truck, having an MACRS class life of 7 years, is classified as 5-year property; the optional MACRS tax rate tables are used to compute depreciation. In addition, assume that for 2020 and 2021 the company has revenues of $200,000 and operating expenses (excluding depreciation) of $130,000. Instructions a. Prepare income statements for 2020 and 2021. (The final amount reported on the income statement should be income before income taxes.) b. Compute taxable income for 2020 and 2021. c. Determine the total depreciation to be taken over the useful life of the delivery truck for both book and tax purposes. d. Explain why depreciation for book and tax purposes will generally be different over the useful life of a depreciable asset.
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