On June 1,2013,Cork Oak Corporation purchased a passenger automobile for 100 percent use in its business.The auto,with a cost basis of $22,000,has a 5-year estimated life.It also is 5-year recovery property.How much depreciation should be taken for 2013,assuming Cork Oak Corporation uses the accelerated depreciation method under MACRS but does not choose to make the election to expense or take bonus depreciation?

Question

Quizplus · Accepted Answer

Under MACRS for 5-year property, the first-year depreciation rate is 20%. Therefore, $22,000 x 20% = $4,400. However, since the car was purchased in June, the half-year convention applies, so $4,400 x 50% = $2,200. But the correct choice is $3,160, which accounts for the MACRS table for automobiles that limits the first-year depreciation to $3,160.

On June 1,2013,Cork Oak Corporation Purchased a Passenger Automobile for 100