​Jesse Placed Equipment That Cost $48,000 in Service in 2015

question 95

Short Answer

​Jesse placed equipment that cost $48,000 in service in 2015 (neither § 179 expensing nor bonus depreciation was elected).On July 1, 2017, Jesse sold the equipment for $22,000. ​
Regular tax and AMT depreciation amounts for the equipment are computed as follows.
​ $\begin{array}{cll}&\text { Regular Tax } & \text { AMT } \\&\text { Depreciation } & \text { Depreciation }\\2015 & \$ 9,600 & \$ 7,200 \\2016 & \$ 15,360 & \$ 12,240 \\2017 & \$ 4,608 & \$ 4,284\end{array}$ ​
​
What AMT adjustments will be required for the equipment for 2017?
​
A)​$5,844 positive adjustment depreciation; $1,292 positive adjustment equipment sale
B)​$324 positive adjustment depreciation; $(5,844) negative adjustment equipment sale
C)$648 positive adjustment depreciation; $(2,276) negative adjustment equipment sale
D)​$324 positive adjustment depreciation; $0 adjustment for the equipment sale

• A)​$5,844 positive adjustment depreciation; $1,292 positive adjustment equipment sale
• B)​$324 positive adjustment depreciation; $(5,844) negative adjustment equipment sale
• C)$648 positive adjustment depreciation; $(2,276) negative adjustment equipment sale
• D)​$324 positive adjustment depreciation; $0 adjustment for the equipment sale

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Definitions:

Useful Life

The period of time over which an asset is expected to be usable by an organization, affecting its depreciation or amortization schedules.

Depreciation Expense

The allocated portion of the cost of an asset, spread out over its useful life, representing wear and tear, obsolescence, or a decline in value.

Store Equipment

Fixed assets such as furniture and machinery used in a store for its operation and not for resale.

Depreciation

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life, reflecting the reduction of value over time.