Jordan paid $30,000 for equipment two years ago and has claimed total depreciation deductions of $15,600 for the two years.The cost of repairs during the same time period was $2,000 while a major overhaul which extended the life of the equipment cost $7,000.What is Jordan's adjusted basis in the equipment at the end of the two-year period?
A)$14,400
B)$16,400
C)$21,400
D)$30,000

Question

Quizplus · Accepted Answer

Jordan's adjusted basis in the equipment can be calculated by subtracting the total depreciation claimed and the cost of repairs from the original cost, and then adding the cost of the major overhaul. 
Adjusted basis = Original cost - Depreciation claimed - Cost of repairs + Cost of major overhaul
Adjusted basis = $30,000 - $15,600 - $2,000 + $7,000
Adjusted basis = $19,400
Therefore, the correct answer is (C) $21,400, which is the adjusted basis at the end of the two-year period.

Jordan Paid $30,000 for Equipment Two Years Ago and Has