ESTION 6 Way Corporation disposed of the following tangible personal property as
ID: 2431487 • Letter: E
Question
ESTION 6
Way Corporation disposed of the following tangible personal property assets in the current year. Assume that the delivery truck is not a luxury auto. Calculate Way Corporation’s 2017 depreciation expense (ignore §179 expense and bonus depreciation for this problem).
Asset
Date acquired
Date sold
Convention
Original
Basis
Furniture (7 year)
5/12/13
7/15/17
HY
$60,000
Machinery (7 year)
3/23/14
3/15/17
MQ
$72,000
Delivery truck* (5 year)
9/17/15
3/13/17
HY
$20,000
Machinery (7 year)
10/11/16
8/11/17
MQ
$280,000
Computer (5 year)
10/11/17
12/15/17
HY
$80,000
*Used 100 percent for business.
Asset
Date acquired
Date sold
Convention
Original
Basis
Furniture (7 year)
5/12/13
7/15/17
HY
$60,000
Machinery (7 year)
3/23/14
3/15/17
MQ
$72,000
Delivery truck* (5 year)
9/17/15
3/13/17
HY
$20,000
Machinery (7 year)
10/11/16
8/11/17
MQ
$280,000
Computer (5 year)
10/11/17
12/15/17
HY
$80,000
*Used 100 percent for business.
Explanation / Answer
Asset Basis Convention MACRS % Portion of Full Year Depreciation allowed in case of disposal of asset Depreciation 1 2 3 4 1*3*4 Furniture 60000 HY 8.93% 50% 2679 Machinery 72000 MQ 10.93% 12.50% 983.7 Disposed in 1st Qtr Delivery truck 20000 HY 19.20% 50% 1920 Machinery 280000 MQ 27.55% 62.50% 48212.5 Disposed in 3rd Qtr Computer 80000 HY 0%* 50% 0 Total 53795.2 * No depreciation for asset acquired and sold in the same year
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