Problem 10-48 (LO 10-2) (Algo)Skip to question [The following information applies to the questions displayed below.] At the beginning of the year, Anna began a calendar-year business and placed in service the following assets during the year: AssetDate AcquiredCost BasisComputers1/30$ 47,500Office desks2/15$ 51,500Machinery7/25$ 94,500Office building8/13$ 426,000 Assuming Anna does not elect §179 expensing and elects not to use bonus depreciation, answer the following questions: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)a. What is Anna’s year 1 cost recovery for each asset?b. What is Anna’s year 2 cost recovery for each asset? **TABLE 5: Nonresidential Real Property Mid-Month Convention Straight Line—39 Years***(for assets placed in service on or after May 13, 1993)*| | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 ||---------------|---------|---------|---------|---------|---------|---------|---------|---------|---------|----------|----------|----------|| **Year 1** | 2.461% | 2.247% | 2.033% | 1.819% | 1.605% | 1.391% | 1.177% | 0.963% | 0.749% | 0.535% | 0.321% | 0.107% || **Year 2–39** | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 || **Year 40** | 0.107 | 0.321 | 0.535 | 0.749 | 0.963 | 1.177 | 1.391 | 1.605 | 1.819 | 2.033 | 2.247 | 2.461 |**Explanation:**This table illustrates the straight-line depreciation schedule for nonresidential real property over a 39-year period, following the mid-month convention. It begins with the percentages allocated for the first year, which decrease incrementally from 2.461% in Month 1 to 0.107% in Month 12. For years 2 through 39, the depreciation percentage is consistent at 2.564% each month, reflecting the uniformity of depreciation in the mid-month convention for these years.In Year 40, the percentages start low in Month 1 at 0.107% and increase steadily each month, pe ### Table 1: MACRS Half-Year Convention#### Depreciation Rate for Recovery Period| Year | 3-Year | 5-Year | 7-Year | 10-Year | 15-Year | 20-Year ||--------|--------|--------|--------|---------|---------|---------|| Year 1 | 33.33% | 20.00% | 14.29% | 10.00% | 5.00% | 3.750% || Year 2 | 44.45 | 32.00 | 24.49 | 18.00 | 9.50 | 7.219 || Year 3 | 14.81 | 19.20 | 17.49 | 14.40 | 8.55 | 6.677 || Year 4 | 7.41 | 11.52 | 12.49 | 11.52 | 7.70 | 6.177 || Year 5 | | 11.52 | 8.93 | 9.22 | 6.93 | 5.713 || Year 6 | | 5.76 | 8.92 | 7.37 | 6.23 | 5.285 || Year 7 | | | 8.93 | 6.55 | 5.90 | 4.888 || Year 8 | | | 4.46 | 6.55 | 5.90 | 4.522 || Year 9 | | | | 6.56 | 5.91 | 4.462 || Year 10| | | | 6.55 | 5.90 | 4.461 || Year 11| | | | 3.28 | 5.91 | 4.462 || Year 12| | | | | 5.90 | 4.461 || Year 13| | | | | 5.91

Solution:- a)Calculation of the Anna’s year 1 cost recovery for each asset as follows:- Notes:- =(1…

Answered: Problem 10-48 (LO 10-2) (Algo) Skip to…

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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Problem 10-48 (LO 10-2) (Algo)

Skip to question

[The following information applies to the questions displayed below.]

At the beginning of the year, Anna began a calendar-year business and placed in service the following assets during the year:

Asset	Date Acquired	Cost Basis
Computers	1/30	$ 47,500
Office desks	2/15	$ 51,500
Machinery	7/25	$ 94,500
Office building	8/13	$ 426,000

Assuming Anna does not elect §179 expensing and elects not to use bonus depreciation, answer the following questions: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

a. What is Anna’s year 1 cost recovery for each asset?

b. What is Anna’s year 2 cost recovery for each asset?

**TABLE 5: Nonresidential Real Property Mid-Month Convention Straight Line—39 Years**

*(for assets placed in service on or after May 13, 1993)*

| | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 |
|---------------|---------|---------|---------|---------|---------|---------|---------|---------|---------|----------|----------|----------|
| **Year 1** | 2.461% | 2.247% | 2.033% | 1.819% | 1.605% | 1.391% | 1.177% | 0.963% | 0.749% | 0.535% | 0.321% | 0.107% |
| **Year 2–39** | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 | 2.564 |
| **Year 40** | 0.107 | 0.321 | 0.535 | 0.749 | 0.963 | 1.177 | 1.391 | 1.605 | 1.819 | 2.033 | 2.247 | 2.461 |

**Explanation:**

This table illustrates the straight-line depreciation schedule for nonresidential real property over a 39-year period, following the mid-month convention. It begins with the percentages allocated for the first year, which decrease incrementally from 2.461% in Month 1 to 0.107% in Month 12.

For years 2 through 39, the depreciation percentage is consistent at 2.564% each month, reflecting the uniformity of depreciation in the mid-month convention for these years.

In Year 40, the percentages start low in Month 1 at 0.107% and increase steadily each month, pe

### Table 1: MACRS Half-Year Convention

#### Depreciation Rate for Recovery Period

| Year | 3-Year | 5-Year | 7-Year | 10-Year | 15-Year | 20-Year |
|--------|--------|--------|--------|---------|---------|---------|
| Year 1 | 33.33% | 20.00% | 14.29% | 10.00% | 5.00% | 3.750% |
| Year 2 | 44.45 | 32.00 | 24.49 | 18.00 | 9.50 | 7.219 |
| Year 3 | 14.81 | 19.20 | 17.49 | 14.40 | 8.55 | 6.677 |
| Year 4 | 7.41 | 11.52 | 12.49 | 11.52 | 7.70 | 6.177 |
| Year 5 | | 11.52 | 8.93 | 9.22 | 6.93 | 5.713 |
| Year 6 | | 5.76 | 8.92 | 7.37 | 6.23 | 5.285 |
| Year 7 | | | 8.93 | 6.55 | 5.90 | 4.888 |
| Year 8 | | | 4.46 | 6.55 | 5.90 | 4.522 |
| Year 9 | | | | 6.56 | 5.91 | 4.462 |
| Year 10| | | | 6.55 | 5.90 | 4.461 |
| Year 11| | | | 3.28 | 5.91 | 4.462 |
| Year 12| | | | | 5.90 | 4.461 |
| Year 13| | | | | 5.91

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