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 Corporation'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.
E)None of these.

Question

Quizplus · Accepted Answer

The cost recovery for the machine would begin in the following year using a half-year convention. This is because the machine was placed in service in January of the following year, and therefore, it would not qualify for any cost recovery in the current year. The half-year convention would apply to the first year the asset is available for use, which would be the following year.

Grape Corporation Purchased a Machine in December of the Current