Lax, LLC Purchased Only One Asset During the Current Year

question 101

Multiple Choice

Lax, LLC purchased only one asset during the current year. Lax placed in service computer equipment (5-year property) on August 26 with a basis of $20,000. Calculate the maximum depreciation expense for the current year (ignoring §179 and bonus depreciation) :

• A) $2,000
• B) $2,858
• C) $3,000
• D) $4,000
• E) None of these

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Definitions:

Secondary Party

An individual or entity indirectly involved in a legal agreement or crime, not the principal actor or participant.

Unconditional Promise

A commitment that does not depend on any conditions to be fulfilled; it is absolute and unequivocal.

Negotiable

Capable of being discussed, transferred, or modified in terms of conditions or agreement.

Maker

In the context of negotiable instruments, the individual or entity that creates and signs the instrument, promising to pay the specified amount.