Problem 1: Use the facts below to answer Problem 1 Questions 1-3 Evergreen Corporation, a calendar year, accrual basis taxpayer, requires a new piece of equipment for use in its manufacturing business. The company would like to determine whether it would be cost beneficial to invest in the equipment and has asked you to help with some of the calculations. The equipment will cost $100,000 and qualifies as a 3 year asset under the MACRS classification. Evergreen will purchase the equipment on January 1, 2019, use the equipment for 3 years, and sell it in October of 2021. Evergreen estimates that it could sell the equipment for $15,000 in 2021. Assume that bonus depreciation and the Sec. 179 expensing option are not available. Problem 1 Question 1: Calculate the total depreciation deductions Evergreen will take on the equipment for 2019, 2020, and 2021 assuming Evergreen sells the equipment in 2021. a. $68,520 b. $85,185 c. $90,739 d. $92,590
Problem 1: Use the facts below to answer Problem 1 Questions 1-3 Evergreen Corporation, a calendar year, accrual basis taxpayer, requires a new piece of equipment for use in its manufacturing business. The company would like to determine whether it would be cost beneficial to invest in the equipment and has asked you to help with some of the calculations. The equipment will cost $100,000 and qualifies as a 3 year asset under the MACRS classification. Evergreen will purchase the equipment on January 1, 2019, use the equipment for 3 years, and sell it in October of 2021. Evergreen estimates that it could sell the equipment for $15,000 in 2021. Assume that bonus depreciation and the Sec. 179 expensing option are not available. Problem 1 Question 1: Calculate the total depreciation deductions Evergreen will take on the equipment for 2019, 2020, and 2021 assuming Evergreen sells the equipment in 2021. a. $68,520 b. $85,185 c. $90,739 d. $92,590
Chapter12: Alternative Minimum Tax
Section: Chapter Questions
Problem 34P
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Transcribed Image Text:Problem 1: Use the facts below to answer Problem 1 Questions 1-3
Evergreen Corporation, a calendar year, accrual basis taxpayer, requires a new piece of
equipment for use in its manufacturing business. The company would like to determine whether
it would be cost beneficial to invest in the equipment and has asked you to help with some of the
calculations.
The equipment will cost $100,000 and qualifies as a 3 year asset under the MACRS
classification. Evergreen will purchase the equipment on January 1, 2019, use the equipment for
3 years, and sell it in October of 2021. Evergreen estimates that it could sell the equipment for
$15,000 in 2021. Assume that bonus depreciation and the Sec. 179 expensing option are not
available.
Problem 1 Question 1: Calculate the total depreciation deductions Evergreen will take on the
equipment for 2019, 2020, and 2021 assuming Evergreen sells the equipment in 2021.
a. $68,520
b. $85,185
c. $90,739
d. $92,590
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