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Way Corporation disposed of the following tangible personal property assets in t

ID: 2562223 • Letter: W

Question

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

$50,000

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

$260,000

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

$50,000

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

$260,000

Computer (5 year)

10/11/17

12/15/17

HY

$80,000

*Used 100 percent for business.

Explanation / Answer

1 2 3 1*2*3 Asset Original Basis Quarter If midquarter Rate Portion of Year DepreciationExpense Furniture (7 year) $50,000 na 0.089 0.5 2232.5 Machinery (7 year) $72,000 1st 0.109 0.125 984 Delivery truck* (5 year) $20,000 na 0.192 0.5 1920 Machinery (7 year) $260,000 4th 0.276 0.625 44768.75 Computer (5 year) $80,000 na 0 0.5 0* Total dep exp 49905 *No depreciation for assets acquired and disposed of in the same year