{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter_10_solutions_to_assigned_problems_Solutions

Chapter_10_solutions_to_assigned_problems_Solutions -...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 10 solution to assigned problems 26. In 2008, Terrell, Inc., purchases machinery costing $548,000. Its 2008 taxable income before considering the Section 179 deduction is $95,000. a. What is Terrell's maximum Section 179 deduction in 2008? Explain. Because Terrell acquired over $510,000 of qualifying Section 179 property, the annual investment limit applies. The $128,000 annual deduction is reduced dollar for dollar by the amount of the investment in qualifying property in excess of $510,000. Terrell's Section 179 deduction is reduced by $38,000 ($548,000 - $510,000) and its Section 179 deduction is limited to $90,000 ($128,000 - $38,000). The taxable income limit does not affect the amount of the 2008 Section 179 deduction because the $95,000 taxable income exceeds the $90,000 maximum election to expense. b. What is the depreciable basis of the equipment? The depreciable basis of the equipment is $458,000 ($548,000 - $90,000). The acquisition cost of the equipment is reduced by the amount of the Section 179 election for the current year.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
37. The United Express Company begins business in August 2008 by purchasing the assets listed in the table below. Calculate the maximum MACRS depreciation on the assets. Asset Cost Trucks $ 98,000 Tractor units 55,000 Office equipment 100,000 To claim the maximum MACRS depreciation, the company should elect to expense the maximum $128,000 allowed under Section 179 for 2008. In addition, the company should elect to expense the assets with the longest useful life. United's cost recovery deduction is $160,333. Office Equipment (7-year life): Election to expense $ 100,000 Trucks (5-year life): Election to expense($128,000 - $100,000) 28,000 Depreciable basis ($98,000 - $28,000) $70,000 First-year depreciation (Table A10-2) x 20 % Cost-recovery on trucks 14,000 Tractor Units ( 3-year life): Depreciable basis $55,000 First-year depreciation (Table A10-2) x 33.33 % Cost-recovery on tractor units 18,333 Total 2008 cost recovery $ 160,333
Image of page 2
38.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern