On June 1,2016,Gabriella Purchased a Computer and Peripheral Equipment (Five-Year

question 89

Essay

On June 1,2016,Gabriella purchased a computer and peripheral equipment (five-year property)for $25,000.She used the assets 40% for business,50% for the production of income,and 10% for personal use.These are the only assets Gabriella purchased during the current year.Determine her total cost recovery deduction for the current year.

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Definitions:

Excess Reserves

The amount of reserves that banks hold over the minimum required by the central bank to back deposits.

Money Creation

The process by which the money supply of a country is increased through the activities of its central bank and commercial banking system.

Banking System

The network of banks and financial institutions that provide banking services, including deposits, loans, and currency exchange.

Required Reserve Ratio

The minimum percentage of deposits that a bank must hold in reserve and not lend out.