Flax, LLC Purchased Only One Asset This Year

question 38

Essay

Flax, LLC purchased only one asset this year. Flax placed in service a computer (5-year property) on January 16 with a basis of $14,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation). (Use MACRS Table 1)

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Definitions:

FIFO Method

A method of inventory valuation where the first items purchased are the first ones to be used or sold, standing for "First In, First Out."

Beginning Work

The value or quantity of work, inventory, or materials in process at the start of a period.

Work In Process

Inventory that includes goods that are in the production process but have not yet been completed or turned into final products.

Purifying Department

A specialized section of a production process where impurities are removed or product quality is enhanced.