Question

Juan acquires a new 5-year class asset on March 14, 2018, for $200,000. This is the only asset Juan acquired during the year. He does not elect immediate expensing under § 179. He does not claim any available additional first-year depreciation. On July 15, 2019, Juan sells the asset.

a. Determine Juan’s cost recovery for 2017.
b. Determine Juan’s cost recovery for 2018.

Answer 1

A. $40,000

B$32,000

Step-by-step explanation:

Cost Recovery can be defined as the way in which a business or an organisation is said to record the revenue in which they earns from

the transaction carried out at the time that their client has paid the invoice given to him or her in the cost of the transaction.

Asset acquired =$200,000

Tax rate =20%

Hence:

$200,000×0.2

= $40,000

B.

Asset acquired = $200,000

Tax rate =32%

Hence:

$200,000×0.32

= $32,000