While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees: Year 1 Assets Computers (5-year) Office equipment (7-year) Furniture (7-year) Start-up costs Purchase Date October 30, Year 1 October 30, Year 1 October 30, Year 1 October 30, Year 1 Basis $16,100 10,000 5,200 18,980 In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $11,980, and the sale was completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation. In the summer, they purchased a small van (for transportation, not considered a luxury auto) and a pinball machine (to help attract new employees). They bought the van on June 15, Year 2, for $26,000 and spent $4,100 getting it ready to put into service. The pinball machine cost $5,100 and was placed in service on July 1, Year 2.
While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees: Year 1 Assets Computers (5-year) Office equipment (7-year) Furniture (7-year) Start-up costs Purchase Date October 30, Year 1 October 30, Year 1 October 30, Year 1 October 30, Year 1 Basis $16,100 10,000 5,200 18,980 In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $11,980, and the sale was completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation. In the summer, they purchased a small van (for transportation, not considered a luxury auto) and a pinball machine (to help attract new employees). They bought the van on June 15, Year 2, for $26,000 and spent $4,100 getting it ready to put into service. The pinball machine cost $5,100 and was placed in service on July 1, Year 2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please Solve with Explanation and Do not Give Image format
![Required information
[The following information applies to the questions displayed below.]
While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a
technology support company called eSys Answers. During year 1, they bought the following assets and incurred the
following start-up fees:
Year 1 Assets
Computers (5-year)
Office equipment (7-year)
Furniture (7-year)
Start-up costs
Year 2 Assets
Purchase Date
October 30, Year 1
October 30, Year 1
October 30, Year 1
October 30, Year 1
In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started
by fellow information systems students preparing to graduate. The customer list cost $11,980, and the sale was
completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt
to really grow their business into something they could do full time after graduation. In the summer, they purchased a
small van (for transportation, not considered a luxury auto) and a pinball machine (to help attract new employees). They
bought the van on June 15, Year 2, for $26,000 and spent $4,100 getting it ready to put into service. The pinball machine
cost $5,100 and was placed in service on July 1, Year 2.
Van
Pinball machine (7-year)
Customer list.
Basis
$16,100
10,000
5,200
18,980
Purchase Date
June 15, Year 2
July 1, Year 2
April 30, Year 2
Basis
$ 30,100
5,100
11,980
Assume that eSys Answers does not claim any §179 expense or bonus depreciation. (Use MACRS Table 1, Table 2,
Table 3, Table 4 and Table 5.) (Round your intermediate calculations and final answers to the nearest whole dollar
amount.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F42fbcea6-afb7-4263-94fe-90d44597a0cf%2Fc3c779f7-657c-443a-8d14-a9722741664f%2F75sbsbj_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a
technology support company called eSys Answers. During year 1, they bought the following assets and incurred the
following start-up fees:
Year 1 Assets
Computers (5-year)
Office equipment (7-year)
Furniture (7-year)
Start-up costs
Year 2 Assets
Purchase Date
October 30, Year 1
October 30, Year 1
October 30, Year 1
October 30, Year 1
In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started
by fellow information systems students preparing to graduate. The customer list cost $11,980, and the sale was
completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt
to really grow their business into something they could do full time after graduation. In the summer, they purchased a
small van (for transportation, not considered a luxury auto) and a pinball machine (to help attract new employees). They
bought the van on June 15, Year 2, for $26,000 and spent $4,100 getting it ready to put into service. The pinball machine
cost $5,100 and was placed in service on July 1, Year 2.
Van
Pinball machine (7-year)
Customer list.
Basis
$16,100
10,000
5,200
18,980
Purchase Date
June 15, Year 2
July 1, Year 2
April 30, Year 2
Basis
$ 30,100
5,100
11,980
Assume that eSys Answers does not claim any §179 expense or bonus depreciation. (Use MACRS Table 1, Table 2,
Table 3, Table 4 and Table 5.) (Round your intermediate calculations and final answers to the nearest whole dollar
amount.)
Transcribed Image Text:Required:
a. What are the maximum cost recovery deductions for eSys Answers for Year 1 and Year 2?
c. What is eSys Answers' basis in each of its assets at the end of Year 2?
Complete this question by entering your answers in the tabs below.
Req A
Req C
What are the maximum cost recovery deductions for eSys Answers for Year 1 and Year 2?
Recovery
Deduction
Year 1
Year 2
< Req A
Req C >
||
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