Question 2. 2. (TCOs 3, 4, 5, and 7) Grady purchased a business asset (3-year pr
ID: 2472176 • Letter: Q
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Question 2. 2. (TCOs 3, 4, 5, and 7) Grady purchased a business asset (3-year property) on November 15, 2011 at a cost of $60,000. This is the only asset he purchased during the year. Grady did not elect to expense any of the asset under § 179, and he did not elect straight-line cost recovery. Grady sold the asset on May 13, 2012. Determine the cost recovery deduction for 2012. (Points : 5)
$7,500
$13,750
$19,998
$36,666
None of the above
Question 2. 2. (TCOs 3, 4, 5, and 7) Grady purchased a business asset (3-year property) on November 15, 2011 at a cost of $60,000. This is the only asset he purchased during the year. Grady did not elect to expense any of the asset under § 179, and he did not elect straight-line cost recovery. Grady sold the asset on May 13, 2012. Determine the cost recovery deduction for 2012. (Points : 5)
Explanation / Answer
Cost Recovery Methods: Depreciation, Amortization, and Depletion.
2016-03-16 Cost recovery refers to the deduction of a portion of thecost of an asset,
used in a business or for the production of income, over its useful life through
depreciation, amortization, or depletion
Since grady did not elect expense under section 179 & not elect straight line cost recovery
Asset Purchased on 15th novemver 2011, it , means asset is used for 137 days till 31st march 2012
Assets cost
$ 60,000.00
Life
3 years or 1095 days
Used till 31.3.2012
137 Days
Hence cost recovery deduction for 2012 =
$ 60,000 * 137 Days / 1095 Days
cost recovery deduction =
$ 7,500.00
Cost Recovery Methods: Depreciation, Amortization, and Depletion.
2016-03-16 Cost recovery refers to the deduction of a portion of thecost of an asset,
used in a business or for the production of income, over its useful life through
depreciation, amortization, or depletion
Since grady did not elect expense under section 179 & not elect straight line cost recovery
Asset Purchased on 15th novemver 2011, it , means asset is used for 137 days till 31st march 2012
Assets cost
$ 60,000.00
Life
3 years or 1095 days
Used till 31.3.2012
137 Days
Hence cost recovery deduction for 2012 =
$ 60,000 * 137 Days / 1095 Days
cost recovery deduction =
$ 7,500.00
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