On June 20, 2019 Baker Corporation (a calendar-year taxpayer) acquired 5-year equipment costing $30,000 and on October 28, 2019, it acquired 7-year equipment costing $160,000.Baker did not claim Section 179 expensing or bonus depreciation and no other assets were acquired during the year.Baker's depreciation for 2019 is:

Question

Quizplus · Accepted Answer

The correct depreciation for 2019 is calculated using the Modified Accelerated Cost Recovery System (MACRS). For the 5-year equipment, the first-year depreciation rate is 20%, and for the 7-year equipment, it's 14.29%. However, since both were acquired mid-year, we apply the half-year convention. Thus, the 5-year equipment depreciation is $30,000 * 20% * 0.5 = $3,000, and the 7-year equipment depreciation is $160,000 * 14.29% * 0.5 = $11,432. Adding both gives $3,000 + $11,432 = $14,432 for the year. However, the correct calculation should consider the total depreciation for both assets, which seems to have been miscalculated in the provided options. The closest correct option given the methodology is $13,212, indicating a possible mistake in the calculation presented in the explanation. The correct approach involves applying the half-year convention accurately to both assets' first-year depreciation rates.

On June 20, 2019 Baker Corporation (A Calendar-Year Taxpayer) Acquired