Question

Beth's business purchased only one asset during the current year. Beth placed in service machinery (7-year property) on December 1 with a basis of $50,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation):

A. $1,785
B. $2,500
C. $7,145
D. $10,000
E. None of these

Answer 1

The maximum depreciation expense for the machinery purchased by Beth's business is $7,145.

Step-by-step explanation:

The maximum depreciation expense for the machinery purchased by Beth's business can be calculated using the straight-line depreciation method. Since the machinery is a 7-year property, the annual depreciation expense can be calculated by dividing the basis of $50,000 by 7 years. Therefore, the maximum depreciation expense would be $7,142.86 (rounded to $7,145).