Suvi, Incorporated purchased two assets during the current year (a full 12-month tax year).On August 10 Suvi placed in service computer equipment (five-year property)with a basis of $20,000 and on November 18 placed in service machinery (seven-year property)with a basis of $10,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 1.)(Round final answer to the nearest whole number.)
A)$857
B)$3,357
C)$5,429
D)$6,000
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

For the computer equipment, since it is five-year property, we use MACRS Table 1 and the half-year convention.

Year 1: 20% x $20,000 = $4,000

For the machinery, since it is seven-year property, we also use MACRS Table 1 and the half-year convention.

Year 1: 14.29% x $10,000 = $1,429

So the total depreciation expense for the year is $4,000 + $1,429 = $5,429.

Suvi, Incorporated Purchased Two Assets During the Current Year (A