ABC Corp Bought a Production Machine on January 1, 2014

question 25

Multiple Choice

ABC Corp bought a production machine on January 1, 2014 for $31,250. The company elected out of Section 179 expensing and elected out of claiming bonus depreciation in 2014, and is depreciating the machine using the MACRS accelerated depreciation tables for 5-year property. What is the 2016 depreciation (year 3) deduction for the machine?

• A)$6,000
• B)$6,250
• C)$10,000
• D)$12,500
• E)None of the above is correct

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Definitions:

Term Structure

The connection between different terms or maturities and interest rates or bond yields.

Fisher Formula

An equation used to identify the nominal interest rate or the required rate of return on an investment, taking inflation into account to determine the real interest rate.

Coupon

The interest rate on a bond, usually expressed as a percentage of the face value and paid at regular intervals.

Semi-Annually

A period or process that occurs twice each year.