Wheeler LLC Purchased Two Assets During the Current Year (A

question 90

Multiple Choice

Wheeler LLC purchased two assets during the current year (a full 12-month tax year) . On November 16 Wheeler placed in service computer equipment (five-year property) with a basis of $16,500 and on April 20 placed in service furniture (seven-year property) with a basis of $11,900. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation) . (Use MACRS Table 2.) (Round final answer to the nearest whole number.)

• A) $1,520
• B) $2,949
• C) $4,807
• D) $5,435
• E) None of the choices are correct.

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Definitions:

Fixed Manufacturing Overhead

Costs associated with production that do not vary with the level of output, such as salaries of production managers and depreciation of equipment.

Machine-Hours

A measure of production time, representing the total hours worked by machines in the manufacturing process, often used to allocate manufacturing overhead to products.

Markup

The extra sum included in the buying price of items to account for operational expenses and profit, which establishes the sales price.

Job-Order Costing

A cost accounting system that assigns costs to specific jobs or batches, used in industries where products are distinctly different.