Question

Michael purchased a new office computer system on January 23, 2018, at a cost of $3,791. He does not want to claim bonus depreciation. Using the half-year convention, the amount Michael may claim for depreciation in 2018 is

Answer 1

$3,791

Explanation:

$3,791+$3,791-$3,791=3,791 magic!

Answer 2

Michael May claimim $758.2 for depreciation in 2018

Explanation:

Given

Costs of System = $3,791

As a general rule, items that cost more than $2,500 must be depreciated.

A computer is categorised as an office equipment with a 5 year property.

Considering half heat convention, Depreciation Rate = 20%

Expected Amount is then calculated as Depreciation Rate * Cost

Expected Amount = $3,791 * 20%

Expected Amount = $3,791 * 0.2

Expected Amount = $758.2

Hence, Michael May claim $758.2 as depreciation