George Purchases Used Seven-Year Class Property at a Cost of $200,000

question 77

Multiple Choice

George purchases used seven-year class property at a cost of $200,000 on April 20, 2018. Determine George's cost recovery deduction for 2018 for alternative minimum tax purposes, assuming George does not elect § 179 and does not take additional first-year depreciation.

• A) $2,500
• B) $10,000
• C) $14,280
• D) $28,580
• E) None of the above

Distinguish between the cost method and equity method of accounting for long-term investments.

Calculate and record the initial cost of purchasing stock, including related fees.

Understand the accounting treatment for bond purchases and sales, including the impact of accrued interest.

Recognize how an investor's share of periodic net income or loss from an investee is recorded under the equity method.

---

Definitions:

Year-End Costs

Expenses or costs incurred by a business at the end of the fiscal year; these may include adjustments, accruals, and prep for financial reporting.

Inventory Cost Flow

An accounting method that determines the value of sold inventory and ending inventory, can be FIFO, LIFO, or Average Cost.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue. It represents the company's bottom line.