Momee Corporation, a calendar-year corporation, bought only one asset in 2013, a crane it purchased for $700,000 on November 24. It disposed of the asset in April, 2018. What is its depreciation deduction for this asset in 2018 if cost recovery was determined using only regular MACRS?
A) $62,510
B) $61,110
C) $31,255
D) $22,916

Question

Quizplus · Accepted Answer

Since the crane was disposed of before the end of the year, Momee Corporation can only claim half of the regular MACRS depreciation for 2018. The regular MACRS depreciation for a 7-year property in its 6th year is 8.93%, so half of that is 4.465%. $700,000 x 4.465% = $31,255, but since the asset was disposed of in April, the corporation can only claim half of this amount, which is $15,627.50. However, the closest option is $22,916, which is likely a simplified calculation or a rounding error in the options provided.

Momee Corporation, a Calendar-Year Corporation, Bought Only One Asset in 2013