Lax LLC Purchased Only One Asset During the Current Year

question 103

Multiple Choice

Lax LLC purchased only one asset during the current year (a full 12-month tax year) .On August 26 Lax placed in service computer equipment (five-year property) with a basis of $20,000. Calculate the maximum depreciation expense for the current year (ignoring §179 and bonus depreciation) . (Use MACRS Table 1.)

• A)$2,000
• B)$2,858
• C)$3,000
• D)$4,000
• E)None of the choices are correct.

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Definitions:

Monthly Rent

Regular payment made for the use of property or land, agreed upon on a monthly basis.

Utilities Expense

Utilities expense refers to the cost incurred by businesses or individuals for the usage of basic utilities such as electricity, water, gas, and telecommunication services.

Accounts Receivable

Money owed to a company by its customers for products or services that have been delivered or used but not yet paid for.

Owner's Drawings

The amount of money or value of other assets withdrawn from the business by the owner for personal use.