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:

Selling Unit

A specific quantity or configuration of a product that is made available for sale to consumers.

Marginal Benefit

The additional satisfaction or utility gained from consuming one more unit of a good or service.

Marginal Cost

The price associated with manufacturing an additional unit of a product or service.

Studying

The act of devoting time and attention to gain knowledge on a particular subject or to prepare for exams.