More help on Depreciation.


H

hi

I'm going over my old quizzes and I'm stuck on depreciation again. It's just
a confusing mess. Can someone help with how these answers are calculated? My
head is spinning from all the 30% additional depreciation and looking at
these confusing charts.

1. Diane purchased a factory building on Nov 15, 1992 for $5,000,000. She
sells the factory building on February 2, 2003. Determine the cost recovery
deduction for the year of the sale.

a. 16,025
b. 19,844 <- the answer
c. 26,458
d. 128,200
e. 158,750

2. John purchased a new car on June 5, 2003 at a cost of $12,000. John used
the car 100% for personal use. Determine his cost recovery deduction in
2003.

-- is the answer 0 because it's a personal use car?

3. On Juuly 10, 2003 Ariff places in service a new sports utility vehicle
that cost 60,000 and weighed 6,300 pounds. The SUV is used 100% for
business. Determine his maximum depreciation for 2003.

a. 7,600
b. 26,400
c. 35,500
d. 40,400 <- the answer
e. none of the above

-I can't figure it out. I took an additional 30% (18,000) and then 42,000 x
..20 (8,400) for a total of 26,400. How do you get 40,400? What am I missing?

4. White company acquires a new machine (seven year property) for $204,000.
White makes the election to expense the maximum amount under 179. No
election is made to use the straight-line method. Determine the total
deductions in calculating taxable income related to the machine for 2003
assumign white has taxable income of 500,000.

a. 46,294
b. 51,151
c.94,205 <-- the answer (how?)
d. 96,294
e. none of the above
 
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H

hi

I just figured this damn problem out... see below.
4. White company acquires a new machine (seven year property) for $204,000.
White makes the election to expense the maximum amount under 179. No
election is made to use the straight-line method. Determine the total
deductions in calculating taxable income related to the machine for 2003
assuming white has taxable income of 500,000.

a. 46,294
b. 51,151
c.94,205 <-- the answer (how?)
d. 96,294
e. none of the above
The $25,000 179 election is limited to 21,000 since the machine costs
$204,000. The machine amount is limited to 200,000 for the election. So you
subtract 4,000 (dollar for dollar) from the 25,000 election to make it
21,000.

So you've got so far: 21,000

Then, 204,000 x .30 (add'l first year depreciation)

Now you've got 21,000 + the new 54,900

Finally, you take (204,000-21,000-54,900) x .1429, the amount from the seven
year chart, for 18,305.

You add 21,000, 54,900, and 18,305 to get... 94, 205.

Thank you, thank you.

Anyone else think this shit is crazy for the professor to make us complete
with the textbook in front of us?
 
A

Arthur Kamlet

I'm going over my old quizzes and I'm stuck on depreciation again. It's just
a confusing mess. Can someone help with how these answers are calculated? My
head is spinning from all the 30% additional depreciation and looking at
these confusing charts.


Just a few comments off the top of my head.

I did what you're doing once, and am very very glad to have
computers now :^)

1. Diane purchased a factory building on Nov 15, 1992 for $5,000,000. She
sells the factory building on February 2, 2003. Determine the cost recovery
deduction for the year of the sale.

a. 16,025
b. 19,844 <- the answer
c. 26,458
d. 128,200
e. 158,750
Not mid quarter in case you tried to use MQ

2. John purchased a new car on June 5, 2003 at a cost of $12,000. John used
the car 100% for personal use. Determine his cost recovery deduction in
2003.

-- is the answer 0 because it's a personal use car?

Yup!



3. On July 10, 2003 Ariff places in service a new sports utility vehicle
that cost 60,000 and weighed 6,300 pounds. The SUV is used 100% for
business. Determine his maximum depreciation for 2003.

a. 7,600
b. 26,400
c. 35,500
d. 40,400 <- the answer
e. none of the above
using 179?

Could it be a printing typo?

The SUV might cost 40,000 or the answer might be 60000


-I can't figure it out. I took an additional 30% (18,000) and then 42,000 x
.20 (8,400) for a total of 26,400. How do you get 40,400? What am I missing?

4. White company acquires a new machine (seven year property) for $204,000.
White makes the election to expense the maximum amount under 179. No
election is made to use the straight-line method. Determine the total
deductions in calculating taxable income related to the machine for 2003
assumign white has taxable income of 500,000.

a. 46,294
b. 51,151
c.94,205 <-- the answer (how?)
d. 96,294
e. none of the above

I like your analysis -- did the problem state it was 2002?
 
J

Janice Davis

Out of curiosity, on these "old quizzes," are all the depreciations methods
straight line? Because there are several different ways to figure
depreciative amounts.
 
C

Criswell The Psychic Weatherman

Janice said:
Out of curiosity, on these "old quizzes," are all the depreciations methods
straight line? Because there are several different ways to figure
depreciative amounts.
As I read them, they say the maximum depreciation amounts. That would usually
be 200DB or section 179, unless straight line is the only option, like for real
estate.
 
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J

Janice Davis

Criswell The Psychic Weatherman said:
As I read them, they say the maximum depreciation amounts. That would usually
be 200DB or section 179, unless straight line is the only option, like for real
estate.
After I posted this reply, it dawned on me that "hi" wasn't talking about
methods of depreciation used by accountants for companies as is taught in
Intermediate Financial Acct. I, but rather on the federal level. I haven't
taken this course yet, and so with that I bid thee adieu from this
particular posting

BOL
Janice
 
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