Greenville Floral places a new tractor (7-year MACRS)into service on January 8,2013.They pay $28,000 for the tractor.This is the only business asset placed into service during this year.Greenville Floral wants to minimize the amount of depreciation deductible in 2013.What is Greenville Floral's cost recovery for 2013?

Question

Quizplus · Accepted Answer

To minimize the amount of depreciation deductible in 2013, Greenville Floral should use the MACRS depreciation method and select the method that results in the smallest deduction for the first year. Based on the MACRS depreciation table, the 7-year property has a depreciation rate of 14.29% for the first year. Therefore, the cost recovery for 2013 would be:

$28,000 x 14.29% = $3,997.20

However, since MACRS depreciation must be rounded to the nearest dollar, the actual cost recovery for 2013 would be $4,000.

Therefore, the best choice is B.

Greenville Floral Places a New Tractor (7-Year MACRS)into Service on January