On April 12,2015,Suzanne bought a computer for $20,000 for business use.This was the only purchase for that year.Suzanne used the most accelerated depreciation method available but did not elect Sec.179.Bonus depreciation was not available.Suzanne sells the machine in 2016.The depreciation on the computer for 2016 is
A)$2,000.
B)$3,200.
C)$4,000.
D)$6,400.

Question

Quizplus · Accepted Answer

Since Suzanne used the most accelerated depreciation method available (which is likely MACRS) and did not elect for Sec.179 or have access to Bonus depreciation, the most likely depreciation schedule for the computer is 5-year MACRS. Using this schedule, the depreciation for the computer in 2016 would be 20% of the remaining basis (which is the original cost of $20,000 minus any depreciation taken in prior years). Since no depreciation was taken in prior years and the computer was sold in 2016, the remaining basis is simply the original cost of $20,000. Thus, the depreciation for 2016 is $20,000 x 20% = $4,000. Therefore, the correct answer is B.

On April 12,2015,Suzanne Bought a Computer for $20,000 for Business