AC 750 Chapter 9

AC 750 Chapter 9 - Chapter 9 Cost Recovery Capital...

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Cost Recovery Chapter 9
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AC 750 - Chapter 9 2 Capital Expenditures Cost Recovery: Deducted ratably over the life of the benefit through depreciation, expensing, amortization, depletion If no determinable life exists, expenditure is recovered at time of disposition Expenditure vs. Capital Improvement
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AC 750 - Chapter 9 3 Depreciation – Personal Property MACRS (after 1986) characteristics: Straight-line depreciation may be elected Remember: Adjust depreciation in the year of sale Statutory Life 3, 5, 7, 10 yrs 15, 20 yrs Method 200% DB 150% DB Convention Half Year or Mid-Quarter Mid-Quarter
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AC 750 - Chapter 9 4 Depreciation: Immediate expensing  §  179 Deduction Allows qualified taxpayers to deduct up to $500,000 (2011) of the cost of depreciable property ( NOT real estate*) acquired during the year. Limitations: Acquisitions during the year cannot exceed $2,000,000 (2011) or the deduction is phased out dollar for dollar. Cannot exceed taxable income
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AC 750 Chapter 9 - Chapter 9 Cost Recovery Capital...

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