purchased equipment for $300,000 with an ADS recovery period of 10 years and a MACRS useful life of 7 years. Section 179 was not elected. MACRS depreciation properly claimed on the asset, including depreciation in the year of sale, totaled $79,605. The equipment was sold on July 1, 2019, for $290,000. As a result of the sale, the adjustment to taxable income needed to arrive at current E & P is: a. No adjustment is required. b. Decrease $49,605

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On January 2, 2018, Orenge Corporation purchased equipment for $300,000 with an ADS recovery period of 10 years and a MACRS useful life of 7 years. Section 179 was not elected. MACRS depreciation properly claimed on the asset, including depreciation in the year of sale, totaled $79,605. The equipment was sold on July 1, 2019, for $290,000. As a result of the sale, the adjustment to taxable income needed to arrive at current E & P is:

a. No adjustment is required.

b. Decrease $49,605.

c. Increase $49,605.

d. Decrease $79,605.

e. None of the above.

Please explain step by step ? 

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