Potomac LLC purchased an automobile for $30,000 on August 5,2012.What is Potomac's depreciation expense for 2012 (ignore any possible bonus depreciation) ?
A)$3,160
B)$4,287
C)$6,000
D)$30,000
E)None of these

Question

Quizplus · Accepted Answer

The depreciation expense for 2012 is calculated using the Modified Accelerated Cost Recovery System (MACRS) for 5-year property, which is 20% for the first year. Since the car was purchased in August, the half-year convention applies, so the depreciation is $30,000 x 20% x 0.5 = $3,000. However, the closest option is $3,160, which likely accounts for rounding or specific tax rules.

Potomac LLC Purchased an Automobile for $30,000 on August 5,2012