The Mid-Year Convention Under MACRS Provides That

question 7

Multiple Choice

The mid-year convention under MACRS provides that

• A)Depreciation is allowable in the year of acquisition of qualified property only if the property is placed in service in the first one-half of that year.
• B)One half of the year-of-acquisition depreciation is allowed regardless of when the property is placed in service during the year.One-half year's depreciation is allowable for the year of disposition.
• C)Depreciation is allowable in the year of disposition only if the property is disposed of in the last one-half of that year.
• D)The cost recovery deduction is based on the number of months the property was in service in the year of acquisition.Therefore,one-half month's cost recovery is allowable for the month in which the property is place in service and for the month of disposition.

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Definitions:

Quick Ratio

A measure of a company's short-term liquidity, calculated as (Current Assets - Inventory) / Current Liabilities, indicating how well a company can meet its short-term financial liabilities.

Days' Sales in Inventory

A financial metric that estimates how long it takes for a company to turn its inventory into sales.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor costs.

Inventory

The entire stock of materials and products that a company possesses for the aim of production or selling.