Required information Problem 10-58 (LO 10-2, LO 10-3) The following information

Question

Required information Problem 10-58 (LO 10-2, LO 10-3) The following information applies to the questions displayed below) Assume that Timberline Corporation has 2017 taxable income of $240,000 for purposes of computing the 5179 expense. It acquired the following assets in 2017: (Use MACRS Table 1, Iable 2. Table 3. Table 4 and Jable 5) Purchase Decenber 1 July 15 Banin 350,000 90,000 30,000 480,000 Asset Dat Furniture (7-year ) Computer equipment (S-year) February 2 Copier (5-year) Machinery (7-year) Total May 22 $ 950,000

Explanation / Answer

As the net taxable income in this case is less than the cost of the property to be deducted under Section 179, the deduction for the year is limited to the amount of your income. Moreover, this lies within the maximum possible deduction limit ($500,000) and investment limit ($2,000,000) for the year.

The balance amount can be carried forward for deduction purpose =$950,000 - 240,000 =$710,000

The advantage of bonus depreciation deduction will also not be taken because of less available taxable income for the year.

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