42. Which of the allowable methods allows the most accelerated depreciation? 43. How is the recovery period of an asset determined? 44. of the following depreciation conventions are not used under MACRS? 45. Which depreciation convention is the general rule for tangible personal property? 46. The MACRS recovery period for automobiles and computers is:
The mid-quarter convention applies. The computer is 4th quarter property and the furniture is 2nd quarter property. The calculations are $15,000 × .05 = $750 and $11,000 × .1785 = $1,964. The total is $2,714 ($750 + $1,964). AACSB: Analytic AACSB: Reflective Thinking AICPA BB: Critical Thinking Blooms: Analyze Learning Objective: 02-02 Determine the applicable cost recovery (depreciation) life; method; and convention for tangible personal and real property and calculate the deduction allowable under basic MACRS. Level of Difficulty: 2 Medium 53. LLC purchased furniture (7-year property) on April 20 with a basis of $20,000 and used the mid-quarter convention. During the current year, which is the fourth year Tasha LLC owned the property, the property was disposed of on December 15. Calculate the maximum depreciation expense, rounding to a whole number: The mid-quarter convention applies. The property was placed in service during the 2nd quarter. The calculations are $20,000 × .1197 = $2,394 × 10.5/12 = $2,095 since the property was disposed of during the 4th quarter. AACSB: Analytic AACSB: Reflective Thinking AICPA BB: Critical Thinking Blooms: Analyze Learning Objective: 02-02 Determine the applicable cost recovery (depreciation) life; method; and convention for tangible personal and real property and calculate the deduction allowable under basic MACRS. Level of Difficulty: 3 Hard 54. Anne LLC purchased computer equipment (5-year property) on August 29 with a basis of $30,000 and used the half-year convention. During the current year, which is the fourth year Anne LLC owned the property, the property was disposed of on January 15. Calculate the maximum depreciation expense:
69. Racine started a new business in the current year. She incurred $52,000 of start-up costs. If her business started on November 23rd of the current year, what is the total expense she may deduct with respect to the start-up costs for her initial year, rounded to the nearest whole number? The maximum immediate expense amount of $5,000 phases out dollar for dollar if more than $50,000 of start-up costs are incurred. Thus, the immediate expensing is $3,000 ($5,000 - ($52,000 - $50,000)). The amortization is $544 ($49,000/180) × 2 months). AACSB: Analytic AICPA BB: Critical Thinking Blooms: Analyze Blooms: Apply Learning Objective: 02-04 Explain the rationale behind amortization; describe the four categories of amortizable intangible assets; and calculate amortization expense. Level of Difficulty: 2 Medium 70. Daschle LLC completed some research and development during June of the current year. The related costs were $60,000. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization expense Daschle may deduct during the current year? The amortization when capitalization is elected is $7,000 ($60,000/60) × 7 months). The amortization period on capitalized research and development is not less than 60 months—and 60 months is the most elected. AACSB: Analytic AICPA BB: Critical Thinking Blooms: Analyze Learning Objective: 02-04 Explain the rationale behind amortization; describe the four categories of amortizable intangible assets; and calculate amortization expense. Level of Difficulty: 1 Easy