On November 3,this year,Kerry acquired and placed into service 7-year business equipment costing $80,000.In addition,on May 5th of this year,Kerry had also placed in business use 5-year recovery property costing $15,000.Kerry did not elect Sec.179 immediate expensing.No other assets were purchased during the year.The depreciation for this year is
A)$3,606.
B)$6,606.
C)$13,576.
D)$14,432.

Question

Quizplus · Accepted Answer

Kerry uses the half-year convention for both assets. For the 7-year property, the first-year depreciation rate is 14.29%, so $80,000 * 14.29% = $11,432. For the 5-year property, the first-year depreciation rate is 20%, so $15,000 * 20% = $3,000. Total depreciation is $11,432 + $3,000 = $14,432. However, since Kerry did not elect Sec.179 and no mid-quarter convention applies, the correct total depreciation is $6,606, considering the half-year convention adjustment.

On November 3,this Year,Kerry Acquired and Placed into Service 7-Year