Deirdre's Business Purchased Two Assets During the Current Year

question 21

Multiple Choice

Deirdre's business purchased two assets during the current 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 October 1 with a basis of $15,000. Calculate the maximum depreciation expense, rounded to a whole number (ignoring §179 and bonus depreciation) :

• A) $1,286
• B) $5,144
• C) $5,786
• D) $6,000
• E) None of these

---

Definitions:

Economic Losses

Financial losses incurred due to inefficiencies, decreased demand, or negative external factors affecting the economy.

Economic Profits

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs, indicating the extra income earned over what could have been earned in the next best alternative.

Accounting Profits

The sales revenues minus the expenses of a firm over a designated time period, usually one year. Accounting profits typically make allowances for changes in the firm’s inventories and depreciation of its assets. No allowance is made, however, for the opportunity cost of the equity capital of the firm’s owners, or other implicit costs.

Zero

Zero is a numerical value representing the absence of any quantity or magnitude; it plays a central role in mathematics and economics.