A Client Placed Three New Business Assets into Service in 2019.The

question 4

Multiple Choice

A client placed three new business assets into service in 2019.The client has high taxable income and would like to maximize the deduction by using bonus depreciation.All of the following assets will qualify for bonus depreciation except

• A)manufacturing equipment.
• B)computer software.
• C)a garage for the service vans.
• D)All of the assets qualify for bonus depreciation.

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Definitions:

Operating Leverage

A financial ratio that measures the degree to which a company can increase operating income by increasing revenue, highlighting the impact of fixed costs.

High Debt

A situation where a company or individual carries a large amount of debt relative to their assets or equity.

Breakeven

The point at which total costs equal total revenue, resulting in neither profit nor loss.

Fixed Costs

Costs that do not change with the level of goods or services produced by a business, such as rent, salaries, and loan payments.