[The following information applies to the questions displayed below.] DLW Corpor

Question

[The following information applies to the questions displayed below.]

DLW Corporation acquired and placed in service the following assets during the year:

Assuming DLW does not elect §179 expensing or bonus depreciation, answer the following questions: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

a. What is DLW's year 1 cost recovery for each asset?

Date Cost Asset Acquired Basis Computer equipment 3/4 $ 18,200 Furniture 3/28 20,300 Commercial building 10/14 306,000

Explanation / Answer

Calculate Year 1 cost recovery for each asset as follows:

Asset Purchase date Quarter GDS Class Life Original basis (A) Rate         (B) Depreciation (AxB) Computer equipment 4th March 1st 5 years 18200 20% 3640 Furniture 28th March 1st 7 years 20300 14.29% 2900.87 Commercial building 14th October 4th 39 years 306000 0.535% 1637.1 Total Year 1 cost recovery 8177.97

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