Consider the following facts: - Company A has a fiscal year that ends on Decembe
ID: 2500763 • Letter: C
Question
Consider the following facts:
- Company A has a fiscal year that ends on December 31, 2015
- It places non-real estate property in service during the year as follows:
Machinery costing $500,000 is placed in service on February 28, 2015
Equipment costing $1,250,000 is placed in service on November 30, 2015
This is the only property placed in service during the year.
Which of the following statements is true?
Company A should use the Mid-Month Convention to determine when the property was placed in service.
Company A should use the Mid-Quarter Convention to determine when the property was placed in service.
Company A should use the Half-Year Convention to determine when the property was placed in service.
None of these answers are correct.
Company A should use the MACRS Convention to determine when the property was placed in service.
Explanation / Answer
Company A should use the Mid-Quarter Convention to determine when the property was placed in service.
Because as per MACRS Convention, the complete costing is - The quarterly cost of Equipment is placed at $312500 per quarter and quarterly Machinery cost is placed at $125000 per quarter.
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