Homework Answers
CALACULATION OF ACRON's MAXIMUM COST RECOVERY EXPENSE IN THE CURRENT YEAR :
| Asset | Original Basis | Bonus Depreciation | Remaining Basis |
MACRS Rate |
Depreciation Deduction |
| New Equipment and tools | $1750000 | $1750000 | $0 | 14.29% | $0 |
| Used Light duty trucks | $1500000 | $0 | $1500000 | 20% | $300000 |
| Used Machinery | $525000 | $0 | $525000 | 14.29% | $75023 |
| Bonus Depreciation | $1750000 | ||||
| Total | $2125023. |
- The total cost recovery deduction is the total depreciation deduction i.e., $2125023.
- Acron construction company is eligible for 100% bonus depreciation on its newly purchased asset (new equipment and tools).
- the company is not eligible for 100% bonus depreciation on its existing assets as they have been already taken and used by the company
- And, Aircon company is not eligible for sec. 179 expense deduction as the newly purchased asset get into exist and the assets exceed the threshold limit of $2500000 by more than $1000000.
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