Question

The (1)-(2) convention allows 50% of a full year's depreciation in the year the asset is placed in service, regardless of when it was actually placed in service.

a. Half-year; Mid-quarter
b. Mid-quarter; Half-year
c. Mid-year; Mid-quarter
d. Half-quarter; Mid-year

Answer 1

The (1)-(2) convention allows for 50% of a full year's depreciation to be taken in the year the asset is placed in service, regardless of the actual date of placement.

Step-by-step explanation:

The (1)-(2) convention refers to the tax depreciation convention used by businesses to calculate depreciation deductions. It allows for 50% of a full year's depreciation to be taken in the year the asset is placed in service, regardless of the actual date of placement. The specific convention mentioned in the question is the half-year/mid-quarter convention, where the first year of depreciation is divided in half and the mid-quarter convention is used to determine the assets placed in service during a specific quarter. This convention is used for tax purposes to determine the depreciation deduction for assets.