Barbara's Bakery purchased three new 7-year assets last year. She chose NOT to use Section 179 immediate expensing or take bonus depreciation. The furnishings were purchased for $15,000 in April, the equipment for $6,000 in July, and the appliances for $40,000 in November. What amount of depreciation expense is allowable in the current (second) year of ownership? a. $16,806 b. $14,939 c. $16,163 d. $16,072

1 answer
Question:

Barbara's Bakery purchased three new 7-year assets last year. She chose NOT to use Section 179 immediate expensing or take bonus depreciation. The furnishings were purchased for $15,000 in April, the equipment for $6,000 in July, and the appliances for $40,000 in November. What amount of depreciation expense is allowable in the current (second) year of ownership?
a. $16,806
b. $14,939
c. $16,163
d. $16,072

Answers

Answer:b. $14,939Explanation:Property placed in service in 1st year:                                                   Amount $ 2nd quarter                              15,000 3rd quarter                                6,000 4th quarter                                40,000 Total furnishing at beginning of 2nd Year $61,000 Half Year depreciation rate in 2nd Year  as per Macrs table under "7 years life" assets, the applicable depreciation in the 2nd year is 24.49%Thus, amount of depreciation expense is allowable in the current (second) year of ownership = $61,000 * 24.49% = $14938.90

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