Question 1

The first and last years of MACRS depreciation deductions for a 7-year asset costing $20,000 using the half-year convention are:

Accepted Answer

The answer of The first and last years of MACRS...

Question 2

On October 12, 2018, Wilson Corporation (a calendar-year taxpayer) acquires 5-year property for $9,000. This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed. What is Wilson's total depreciation deduction for 2018?

Accepted Answer

The answer of On October 12, 2018, Wilson Corporation (a...

Question 3

Other Objective Questions
Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions:
-Jack did not depreciate one of his machines that cost $40,000 because he had net operating losses for the last two years. Which of the following statements is true?

Accepted Answer

The answer of Other Objective Questions
Indicated by a P for...

Question 4

Useful lives for realty include all of the following except:

Accepted Answer

The answer of Useful lives for realty include all of...

Question 5

When fully depreciating 7-year property, the final year of depreciation will be year:

Accepted Answer

Under the Modified Accelerated Cost Recovery System (MACRS), which is used in the United States to depreciate property for tax purposes, the final year of depreciation for 7-year property actually extends into the 8th year. This is because MACRS uses a half-year convention for most property, meaning only a half-year's worth of depreciation is claimed in both the first and last years of the recovery period.

Question 6

On November 7, 2018, Wilson Corporation acquires 7-year property for $25,000. This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed. What is Wilson's total depreciation deduction for 2018?

Accepted Answer

The answer of On November 7, 2018, Wilson Corporation acquires...

Question 7

The only acceptable convention for MACRS realty is

Accepted Answer

Mid-month convention is the only acceptable convention for MACRS realty. This convention assumes that the asset was placed in service in the middle of the month, and allows for equal depreciation to be taken for that month regardless of the actual date the asset was placed in service. This convention is widely used because it is simple to apply and minimizes the potential for tax disputes.

Question 8

Gonzalez Corporation is a calendar-year taxpayer. What is the MACRS depreciation percentage deduction for the first year for a 7-year asset acquired February 15 under the mid-quarter convention.

Accepted Answer

The answer of Gonzalez Corporation is a calendar-year taxpayer. What...

Question 9

When fully depreciating 5-year property, the final year of depreciation will be year:

Accepted Answer

The answer of When fully depreciating 5-year property, the final...

Question 10

MACRS means

Accepted Answer

MACRS stands for Modified Accelerated Cost Recovery System. It is a method of depreciation used for tax purposes in the United States, which allows for accelerated write-offs of assets.

Question 11

Other Objective Questions
Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions:
-The adjusted basis of an asset is:

Accepted Answer

The adjusted basis of an asset is the acquisition cost less cost recovery. This includes any depreciation or amortization taken on the asset over time. Option A is incorrect because it does not take into account any cost recovery. Option C is incorrect because it subtracts the selling price from the acquisition cost, which is not the correct formula for determining adjusted basis. Option D is incorrect because it only considers the cash used to purchase the asset, and does not take into account any other costs associated with the acquisition.

Question 12

MACRS depreciation for 5-year assets is based on:

Accepted Answer

MACRS depreciation for 5-year assets is based on the 200 percent declining balance method, but with a switch to straight-line at the appropriate time to ensure that the total amount of depreciation taken over the asset's life is the same as it would be under the straight-line method. In this case, the switch occurs in year three. Therefore, the correct answer is C - 200 percent declining balance with a switch to straight-line.

Question 13

Other Objective Questions
Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions:
-Joe started a new business this year. He had purchased a computer two years ago for $4,000 and decided to use it in his business until he could afford a new system. He could purchase a new computer with the same specifications for $1,800, but his used computer is worth only $1,100. What is his computer's basis for depreciation?

Accepted Answer

The answer of Other Objective Questions
Indicated by a P for...

Question 14

Harris Corporation (a calendar-year taxpayer), acquired a 5-year asset costing $10,000 on October 2^nd. What are the first and last years of MACRS depreciation deductions using the mid-quarter convention?

Accepted Answer

The answer of Harris Corporation (a calendar-year taxpayer), acquired a...

Question 15

Moore Corporation (a calendar-year taxpayer), acquired a 5-year asset costing $10,000 on April 2^nd. What are the first and last years of MACRS depreciation deductions using the mid-quarter convention?

Accepted Answer

The mid-quarter convention applies when more than 40% of the purchase price of assets (other than buildings) is placed in service during the last quarter of the year. In this case, since the asset was placed in service on April 28, 2010, it qualifies for the mid-quarter convention. Under MACRS, the 5-year asset would have a depreciation rate of 20% (from the GDS table), meaning the first-year depreciation would be $2,000. However, since the mid-quarter convention applies, only 25% of the first-year depreciation can be claimed, so the deduction for 2010 is $500. The last year of depreciation would be in 2014, which would have a deduction of $426. Therefore, the first and last years of MACRS depreciation deductions using the mid-quarter convention are $500 and $426, respectively.

Question 16

The first and last years of MACRS depreciation deductions for a 5-year asset costing $10,000 using the half-year convention are:

Accepted Answer

The MACRS system uses a half-year convention for the first and last years of depreciation. For a 5-year asset, the first year's depreciation is 20% of the cost, which is $2,000. The last year's depreciation is the same as the second to last year due to the half-year convention, which is $576 (11.52% of $10,000 in the fourth year, halved for the fifth year).

Question 17

During the year, Garbin Corporation (a calendar-year corporation that manufactures furniture) purchased the following assets:  In computing depreciation of these assets, which of the following averaging conventions will be used?

Accepted Answer

Since Garbin Corporation is a calendar-year corporation, it is subject to the half-year convention. Therefore, option A is correct. The mid-month convention will also be used to accurately calculate the depreciation. The mid-quarter convention would only be used if more than 40% of the assets were purchased in the last quarter of the year, which is not the case here. Therefore, option B and C are not the best choices, and option D is not relevant.

Question 18

Conrad Corporation has a June 30 year end. What is the MACRS depreciation percentage deduction for the first year for a 5-year asset acquired October 15 under the mid-quarter convention.

Accepted Answer

The answer of Conrad Corporation has a June 30 year...

Question 19

All of the following are acceptable conventions for MACRS property except:

Accepted Answer

Mid-week is not an acceptable convention for MACRS property. The other options (Mid-month, Mid-quarter, and Half-year) are all acceptable conventions for determining the depreciation deduction under MACRS.

Question 20

Lopez Corporation is a calendar-year taxpayer. What is the MACRS depreciation percentage deduction for the last year for a 7-year asset acquired May 12 under the mid-quarter convention.

Accepted Answer

Under the mid-quarter convention, if more than 40% of the assets are purchased in the last quarter of the year, then all assets are treated as if they were purchased in the middle of the quarter. Since the asset was purchased on May 12, it falls in the second quarter. The MACRS depreciation percentage for 7-year property acquired in the second quarter under mid-quarter convention is 10.71%. Therefore, the deduction for the last year would be 10.71% x 7/2 = 3.33%.

Quiz 7: Property Acquisitions and Cost Recovery Deductions

The first and last years of MACRS depreciation deductions for a 7-year asset costing $20,000 using the half-year convention are:

On October 12, 2018, Wilson Corporation (a calendar-year taxpayer) acquires 5-year property for $9,000. This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed. What is Wilson's total depreciation deduction for 2018?

Useful lives for realty include all of the following except:

When fully depreciating 7-year property, the final year of depreciation will be year:

On November 7, 2018, Wilson Corporation acquires 7-year property for $25,000. This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed. What is Wilson's total depreciation deduction for 2018?

The only acceptable convention for MACRS realty is

Gonzalez Corporation is a calendar-year taxpayer. What is the MACRS depreciation percentage deduction for the first year for a 7-year asset acquired February 15 under the mid-quarter convention.

When fully depreciating 5-year property, the final year of depreciation will be year:

MACRS means

Other Objective Questions Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions: -The adjusted basis of an asset is:

MACRS depreciation for 5-year assets is based on:

Harris Corporation (a calendar-year taxpayer) , acquired a 5-year asset costing $10,000 on October 2^nd. What are the first and last years of MACRS depreciation deductions using the mid-quarter convention?

Moore Corporation (a calendar-year taxpayer) , acquired a 5-year asset costing $10,000 on April 2^nd. What are the first and last years of MACRS depreciation deductions using the mid-quarter convention?

The first and last years of MACRS depreciation deductions for a 5-year asset costing $10,000 using the half-year convention are:

During the year, Garbin Corporation (a calendar-year corporation that manufactures furniture) purchased the following assets: In computing depreciation of these assets, which of the following averaging conventions will be used?

Conrad Corporation has a June 30 year end. What is the MACRS depreciation percentage deduction for the first year for a 5-year asset acquired October 15 under the mid-quarter convention.

All of the following are acceptable conventions for MACRS property except:

Lopez Corporation is a calendar-year taxpayer. What is the MACRS depreciation percentage deduction for the last year for a 7-year asset acquired May 12 under the mid-quarter convention.

Quiz 7: Property Acquisitions and Cost Recovery Deductions

The first and last years of MACRS depreciation deductions for a 7-year asset costing $20,000 using the half-year convention are:

On October 12, 2018, Wilson Corporation (a calendar-year taxpayer) acquires 5-year property for $9,000. This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed. What is Wilson's total depreciation deduction for 2018?

Useful lives for realty include all of the following except:

When fully depreciating 7-year property, the final year of depreciation will be year:

On November 7, 2018, Wilson Corporation acquires 7-year property for $25,000. This is the only property acquired this year and neither Section 179 expensing nor bonus depreciation were claimed. What is Wilson's total depreciation deduction for 2018?

The only acceptable convention for MACRS realty is

Gonzalez Corporation is a calendar-year taxpayer. What is the MACRS depreciation percentage deduction for the first year for a 7-year asset acquired February 15 under the mid-quarter convention.

When fully depreciating 5-year property, the final year of depreciation will be year:

MACRS means

Other Objective Questions Indicated by a P for personalty, R for realty, or B for both personalty and realty which are subject to the following provisions: -The adjusted basis of an asset is:

MACRS depreciation for 5-year assets is based on:

Harris Corporation (a calendar-year taxpayer) , acquired a 5-year asset costing $10,000 on October 2nd. What are the first and last years of MACRS depreciation deductions using the mid-quarter convention?

Moore Corporation (a calendar-year taxpayer) , acquired a 5-year asset costing $10,000 on April 2nd. What are the first and last years of MACRS depreciation deductions using the mid-quarter convention?

The first and last years of MACRS depreciation deductions for a 5-year asset costing $10,000 using the half-year convention are:

During the year, Garbin Corporation (a calendar-year corporation that manufactures furniture) purchased the following assets: In computing depreciation of these assets, which of the following averaging conventions will be used?

Conrad Corporation has a June 30 year end. What is the MACRS depreciation percentage deduction for the first year for a 5-year asset acquired October 15 under the mid-quarter convention.

All of the following are acceptable conventions for MACRS property except:

Lopez Corporation is a calendar-year taxpayer. What is the MACRS depreciation percentage deduction for the last year for a 7-year asset acquired May 12 under the mid-quarter convention.

Harris Corporation (a calendar-year taxpayer) , acquired a 5-year asset costing $10,000 on October 2^nd. What are the first and last years of MACRS depreciation deductions using the mid-quarter convention?

Moore Corporation (a calendar-year taxpayer) , acquired a 5-year asset costing $10,000 on April 2^nd. What are the first and last years of MACRS depreciation deductions using the mid-quarter convention?