Wellington Company purchases a new warehouse on August 24,1993,for $1,000,000 (exclusive of the cost allocated to the land).What is the 2013 MACRS depreciation deduction?

Question

Quizplus · Accepted Answer

The MACRS recovery period for a warehouse is 39 years. Using the straight-line method, the annual depreciation deduction would be (1,000,000/39) = $25,641. However, since the property was purchased in August 1993, only a half-year of depreciation is allowed for that year. Therefore, for 2013, the depreciation deduction is (25,641 x 3.64%) = $931. Adding up the half-year depreciation deductions for each year, we get a total of $31,740. So, the correct answer is C.

Wellington Company Purchases a New Warehouse on August 24,1993,for $1,000,000