Grape Corporation purchased a machine in December of the current year.This was the only asset purchased during the current year.The machine was placed in service in January of the following year.No assets were purchased in the following year.Grape's cost recovery would begin:
A)In the current year using a mid-quarter convention.
B)In the current year using a half-year convention.
C)In the following year using a mid-quarter convention.
D)In the following year using a half-year convention.

Question

Quizplus · Accepted Answer

Since the machine was placed in service in the following year, cost recovery would begin in the following year. The half-year convention would be used since the machine was not placed in service during the first half of the year. The mid-quarter convention would not apply since no other assets were purchased during the year.

Grape Corporation Purchased a Machine in December of the Current