CH2 Homework (ACCT 3510)-Jessel Hidalgo

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Utah State University *

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3510

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Accounting

Date

Apr 3, 2024

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xlsx

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Uploaded by GeneralGuanaco4094

Jessel Hidalgo ACCT- 3510 CH 2 Homework Given: Purchase price- Building 760,000 Legal fees 300 Interior- Finished(Renovation) 5,000 Basis of Building: 765,300 Repairs is not included 48. At the beginning of the year, Anna began a calendar-year business and placed in service the following assets during the year: Asset Date Acquired Cost Basis Life Year 1 Year 2 Computers 30-Jan 28,000 5 5,600.00 8,960 Office Desks 15-Feb 32,000 7 4,572.80 7,837 Machinery 25-Jul 75,000 7 10,717.50 18,368 Office Building 13-Aug 400,000 35 9,844.000 10,256 535,000 30,734 45,420 Assuming Anna does not elect §179 expensing and elects not to use bonus depreciation, answer the following questions: a)What is Anna’s year 1 cost recovery for each asset? 30,734 b)What is Anna’s year 2 cost recovery for each asset? 45,420 39.Emily purchased a building to store inventory for her business. The purchase price was $760,000. Emily also paid legal fees of $300 to acquire the building. In March, Emily incurred $2,000 to repair minor leaks in the roof (from storm damage earlier in the month) and $5,000 to make the interior suitable for her finished goods. What is Emily’s cost basis in the new building?

53.Evergreen Corporation (calendar year-end) acquired the following assets during the current year: Assets Date Place in Service Original Basis Life Rate Current Year Machinery 25-Oct 70,000 7 14.29% 10,003 Computer Equipement 3-Feb 10,000 5 20.00% 2,000 Used delivery truck 17-Aug 23,000 5 20.00% 4,600 Furniture 22-Apr 150,000 7 14.29% 21,435 253,000 38,038 38,038 b)What is the allowable MACRS depreciation on Evergreen’s property in the current year if Evergreen does not elect out of bonus depreciation? Qualified Property 253,000 Bonus Depreciation rate 60% >> current year is 2024 with 60% 151,800 Note: 1,050,000 of tangible personal property can be immediately expense on 2021 Page 2-53 Assets Place in Service Life Basis Machinery 12-Sep 7 470,000 Computer Equipment 10-Feb 5 70,000 Delivery Truck 21-Aug 5 93,000 Qualified Improvement property 2-Apr 1,380,000 Total 2,013,000 a)What is the allowable MACRS depreciation on Evergreen’s property in the current year, assuming Evergreen does not elect §179 expense and elects out of bonus depreciation? 60.Assume that ACW Corporation has 2021 taxable income of $1,500,000 for purposes of computing the §179 expense. The company acquired the following assets during 2021 (assume no bonus depreciation):

a)What is the maximum amount of §179 expense ACW may deduct for 2021? Description: Qualifiying Property 2,013,000 Threshold for 179 phase-out 2,620,000 Phaseout Max 179 expense - >> its negative Maximum 179 expense before phase-out 1,050,000 Maximum 179 expense AFTER phase-out 1,050,000 b)What is the maximum total depreciation that ACW may deduct in 2021 on the assets it placed in service in 2021? Assets Place in Service Life Basis Rate 179 Expensen Remaining Depreciation Machinery 12-Sep 7 470,000 14.29% 470,000 67,163 Computer Equipment 10-Feb 5 70,000 20.00% 70,000 14,000 Delivery Truck 21-Aug 5 93,000 20.00% 93,000 18,600 2-Apr 1,380,000 1.819% 1,050,000 330,000 6,003 Total 2,013,000 105,766 Add: 179 Expense 1,050,000 Maximum Toal Depreciation 1,155,766 a)Calculate the allowable depreciation for year 1 (ignore the §179 expense and bonus depreciation). Four Wheeler 6500 Rates 5 year vehicle 20.00% MACRS Depreciation rate 1,300 Personal use 175 Total 765 Business use 590 % in Business 77.12% Deduction for 4 Wheeler used for Business: 1,003 Qualified Improvement property 65.Phil owns a ranch business and uses four-wheelers to do much of his work. Occasionally, though, he and his boys will go for a ride together as a family activity. During year 1, Phil put 765 miles on the four-wheeler that he bought on January 15 for $6,500. Of the miles driven, only 175 miles were for personal use. Assume four-wheelers qualify to be depreciated according to the five-year MACRS schedule and the four-wheeler was the only asset Phil purchased this year.

Four Wheeler 6500 Rates 5 32.00% MACRS Depreciation rate 2,080 Personal use 400 Total 930 Business use 530 % in Business 56.99% Deduction for 4 Wheeler used for Business: 1,185 Year Placed in Service 2021 2020 2019 2018 1 10,100 10,100* 10,100* 10,000* 2 16,100 16,100 16,100 16,000 3 9,700 9,700 9,700 9,600 4 and after 5,760 5,760 5,760 5,760 a)The vehicle cost $35,000, and business use is 100 percent (ignore §179 expense). Description 2021 2022 Vehicle cost 35,000 35,000 MACRS Depreciation use 20.00% 32.00% MACRS Depreciation expense 7,000 11,200 Max depreciation per IRS 10,100 16,100 Max Depreciation deduction: 7,000 11,200 18,200 b)The vehicle cost $80,000, and business use is 100 percent. b)Calculate the allowable depreciation for year 2 if total miles were 930 and personal-use miles were 400 (ignore the §179 expense and bonus depreciation). 67.Lina purchased a new car for use in her business during 2021. The auto was the only business asset she purchased during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (including §179 expense unless stated otherwise) for the automobile in 2021 and 2022 (Lina doesn’t want to take bonus depreciation for 2021 or 2022) in the following alternative scenarios (assuming half-year convention for all): Recovery Year

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