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Required: a. Compute the maximum 2022 depreciation deductions, including $179 expense (ignoring bonus depreciation).

Required: a. Compute the maximum 2022 depreciation deductions, including $179 expense (ignoring bonus depreciation).

FINANCIAL ACCOUNTING
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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Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2022. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2022: Date Placed in Asset Office furniture Cost Service Machinery Used delivery truck* $ 150,000 1,560,000 40,000 02/03/2022 07/22/2022 08/17/2022 "Not considered a luxury automobile. During 2022, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2023 to increase its production capacity. These are the assets acquired during 2023: Date Placed in Asset Cost Service Computers and information $ 400,000 03/31/2023 system Luxury auto* 80,000 05/26/2023 Assembly equipment 1,200,000 08/15/2023 700,000 11/13/2023 Storage building *Used 100% for business purposes. Karane generated taxable income in 2023 of $1,732,500 for purposes of computing the $179 expense limitation. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10.) Note: Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers. Required: a. Compute the maximum 2022 depreciation deductions, including $179 expense (ignoring bonus depreciation). Note: Apply the $179 deduction to the most expensive eligible asset first. Answer is not complete. Description Cost $179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction Office furniture $ 150,000 is 0 $ 150,000 ( $ 21,435 $ 21,435 Machinery Used delivery truck Total 1,560,000 40,000 0 0 40,000 8,000 $ 1,750,000 $ 0 $ 190,000 $ 29,435 $ 8,000 29,435
Transcribed Image Text:Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2022. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2022: Date Placed in Asset Office furniture Cost Service Machinery Used delivery truck* $ 150,000 1,560,000 40,000 02/03/2022 07/22/2022 08/17/2022 "Not considered a luxury automobile. During 2022, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2023 to increase its production capacity. These are the assets acquired during 2023: Date Placed in Asset Cost Service Computers and information $ 400,000 03/31/2023 system Luxury auto* 80,000 05/26/2023 Assembly equipment 1,200,000 08/15/2023 700,000 11/13/2023 Storage building *Used 100% for business purposes. Karane generated taxable income in 2023 of $1,732,500 for purposes of computing the $179 expense limitation. (Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10.) Note: Leave no answer blank. Enter zero if applicable. Input all the values as positive numbers. Required: a. Compute the maximum 2022 depreciation deductions, including $179 expense (ignoring bonus depreciation). Note: Apply the $179 deduction to the most expensive eligible asset first. Answer is not complete. Description Cost $179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction Office furniture $ 150,000 is 0 $ 150,000 ( $ 21,435 $ 21,435 Machinery Used delivery truck Total 1,560,000 40,000 0 0 40,000 8,000 $ 1,750,000 $ 0 $ 190,000 $ 29,435 $ 8,000 29,435
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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