Lax LLC Purchased Only One Asset During the Current Year

question 18

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 $41,000. Calculate the maximum depreciation expense for the current year (ignoring §179 and bonus depreciation) . (Use MACRS Table 1.)

• A)$6,200
• B)$7,058
• C)$7,200
• D)$8,200
• E)None of the choices are correct.

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Definitions:

Assembly Department

A division within a manufacturing facility where parts are put together to make a final product.

Cost Reconciliation Report

A document summarizing the costs in a production process, comparing expected costs to actual costs, and explaining differences or variances.

Weighted-Average Method

A cost accounting method used to calculate the cost per unit of inventory by considering the weighted average of the costs of the items available for sale.

Total Cost Accounted For

The comprehensive total of all costs recorded and allocated for a specific purpose or project.