Joe Purchased a New Five-Year Class Asset on June 1,2014

question 16

Essay

Joe purchased a new five-year class asset on June 1,2014.The asset is listed property (not an automobile).It was used 55% for business and 45% for the production of income.The asset cost $100,000.Joe made the § 179 election.Joe's taxable income would not create a limitation for purposes of the § 179 deduction.Joe does not take additional first­year depreciation (if available).Determine Joe's total cost recovery (including the § 179 deduction)for the year.

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Definitions:

Step-Down Method

An allocation method used in cost accounting to allocate service department costs to production departments in a sequential manner based on certain criteria.

Custodial Services

Services provided by companies or individuals focusing on the cleaning and maintenance of buildings or properties.

Maintenance

Activities and practices aimed at keeping equipment, systems, or infrastructure in working condition and preventing failures.

Production Departments

Departments within an organization responsible for manufacturing or producing the products or services the company offers.