Deirdre's Business Purchased Two Assets During the Current Year (A

question 16

Multiple Choice

Deirdre's business purchased two assets during the current year (a full 12-month tax year) . Deirdre placed in service computer equipment (5-year property) on January 20 with a basis of $15,000 and machinery (7-year property) on September 1 with a basis of $15,000. Calculate the maximum depreciation expense, (ignoring §179 and bonus depreciation) . (Use MACRS Half-Year Convention) (Round final answer to the nearest whole number.)

• A) $1,286.
• B) $5,144.
• C) $5,786.
• D) $6,000.
• E) None of the choices are correct.

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Definitions:

Standard Costs

Predetermined costs for materials, labor, and overhead used to control actual operating costs and to measure cost variances.

Direct Labor Time Variance

The difference between the actual time spent on production and the standard time expected, multiplied by the direct labor rate.

Actual Costs

The real costs incurred in the production, acquisition, or other activities of a business, as opposed to estimated or budgeted costs.

Standard Costs

An accounting practice where predetermined costs are used for calculating the cost of production, often for budgeting and performance evaluation purposes.