In April of 2014,Brandon Acquired Five-Year Listed Property (Not an Automobile)for

question 10

Multiple Choice

In April of 2014,Brandon acquired five-year listed property (not an automobile) for $30,000 and used it 70% for business.No election was made regarding Sec.179 and bonus depreciation was not available.In 2015,his business use of the property dropped to 40%.Which of the following statements is true?

• A)The change does not affect Brandon's previous depreciation.
• B)Brandon must recapture $2,100 as ordinary income.
• C)Brandon must recapture $4,200 as ordinary income.
• D)Brandon must amend the previous tax return and recompute depreciation.

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Definitions:

Plantwide Factory Overhead Rate

The plantwide factory overhead rate is a single rate used to allocate all of a plant's manufacturing overhead costs to its production activities, based on a common basis such as direct labor hours.

Overhead Rates

The rates used to allocate indirect costs to products or services, representing the proportion of overheads each product or service carries.

Allocation-Base Usage

The process of distributing costs based on a predetermined criterion or base, such as machine hours or labor costs.

Activity-Based Costing

Activity-based costing is a method in accounting that assigns costs to products and services based on the resources they consume and the activities undertaken to produce them.