Suvi,Inc.purchased two assets during the current year (a full 12-month tax year).Suvi placed in service computer equipment (5-year property)on August 10 with a basis of $20,000 and machinery (7-year property)on November 18 with a basis of $10,000.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Table 1 in the text)(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

Suvi,Inc.purchased two assets during the current year (a full 12-month tax year).Suvi placed in service computer equipment (5-year property)on August 10 with a basis of $20,000 and machinery (7-year property)on November 18 with a basis of $10,000.Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation).(Use MACRS Table 1 in the text)(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.

Quizplus · Accepted Answer

The maximum depreciation expense can be calculated using the MACRS depreciation table. For computer equipment, which is 5-year property, the appropriate percentage from Table 1 is 20%. This means that the maximum depreciation expense for the equipment is $4,000 ($20,000 basis x 20%).

For machinery, which is 7-year property, the appropriate percentage from Table 1 is 14.29%. This means that the maximum depreciation expense for the machinery is $1,429 ($10,000 basis x 14.29%).

Adding these two amounts together gives a total maximum depreciation expense of $5,429. Therefore, the correct answer is C.

Suvi,IncPurchased Two Assets During the Current Year (A Full 12-Month