Eva Purchased Office Equipment 7-Year Property)for Use in Her Business

question 23

Essay

Eva purchased office equipment 7-year property)for use in her business.She paid $126,000 for the equipment on July 1,2013.Eva did not purchase any other property during the year.For 2013,her business had net income of $26,000,before depreciation and before considering the election to expense.
a.What is the maximum amount that Eva can elect to expense in 2013 under Section 179?
b.What is the total depreciation regular depreciation and the amount allowed as a 2013 deduction under the election to expense)on the office equipment for 2013,assuming Eva uses the accelerated method under MACRS and claims the maximum amount allowable under the election to expense?
c.Assuming that Eva elected to expense the equipment in 2013 and that her business has net income in 2014 of $200,000,before depreciation and before considering the election to expense,what is Eva's total depreciation deduction regular depreciation and the amount allowed under the election to expense)for the equipment for 2014?

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Definitions:

Net Sales

The total revenue from sales less returns, allowances, and discounts.

Cost of Goods Sold

The straightforward costs related to the production of goods a company distributes, encompassing materials and labor expenses.

Gross Profit

The financial measure representing the difference between sales revenue and the cost of goods sold, indicating the efficiency of a company in managing its labor and supplies in production.

Net Income

The company's final earnings following the deduction of all expenses and taxes from the gross revenue.