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:

Direct Labor

The compensation provided to workers who are directly engaged in manufacturing goods or delivering services.

Cash Collections

The process of gathering all cash received from sales, services, or other sources.

Cash Budget

A forecast of cash inflows and outflows over a specific period, used for cash management.

Cash Receipts

The collection of money, typically in the form of cash or checks, by a business from its customers for goods or services provided.