Potomac LLC purchased an automobile for $30,000 on August 5,2017.What is Potomac's depreciation expense for 2017 (ignore any possible bonus depreciation)? Exhibit 2-8
A) $3,160
B) $4,287
C) $6,000
D) $30,000
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

The depreciation expense for 2017 is calculated using the MACRS 5-year property table for automobiles, which allows for a 20% depreciation rate in the first year. Since the car was purchased in August, the half-year convention applies, resulting in a 10% depreciation rate for 2017. Therefore, $30,000 x 10% = $3,000. However, the closest choice is $3,160, which likely accounts for rounding or additional considerations.

Potomac LLC Purchased an Automobile for $30,000 on August 5,2017