Question

Ethan's Eggroll House, a calendar year corporation, purchased a new computer and printer in January for $1,500. In February, the business purchased a new oven for $1,200. No other assets were purchased during the year. How much depreciation will be taken on these items in the second year of service if the taxpayer does NOT elect to use Section 179 and does NOT use bonus depreciation

Answer 1

depreciation for year 2 = $773.88

Step-by-step explanation:

the MACRS depreciation schedule for computer equipment is:

5 year class life (half year convention)

year depreciation % assets' cost depreciation expense

1 20% $1,500 $300

2 32% $1,500 $480

3 19.20% $1,500 $288

4 11.52% $1,500 $172.80

5 11.52% $1,500 $172.80

6 5.76% $1,500 $86.40

the MACRS depreciation schedule for an oven is:

7 year class life (half year convention)

year depreciation % assets' cost depreciation expense

1 14.29% $1,200 $171.48

2 24.49% $1,200 $293.88

3 17.49% $1,200 $209.88

4 12.49% $1,200 $149.880

5 8.93% $1,200 $107.16

6 8.92% $1,200 $107.04

7 8.93% $1,200 $107.16

8 4.46% $1,200 $53.52

depreciation for year 2 = $480 + $293.88 = $773.88