Ralph Buys a New Truck (5-Year MACRS Property) to Use

question 95

Multiple Choice

Ralph buys a new truck (5-year MACRS property) to use in his landscaping business on May 13, 2018, at a cost of $18,000. On November 5, 2018, Ralph takes advantage of an end of the season clearance sale to purchase various landscaping equipment (7-year MACRS property) costing $34,000. Assuming that Ralph does not wish to immediately expense any of the cost of the property purchased this year and elects not to take bonus depreciation, what is his 2018 maximum allowable cost recovery deduction?

• A)$2,114
• B)$5,714
• C)$8,459
• D)$2,086
• E)$15,500

---

Definitions:

Equity Multiplier

A financial ratio indicating the proportion of a company's assets that are financed by stockholder's equity.

Long-Term Debt Ratio

A financial ratio that shows the proportion of a company's long-term debt relative to its total capital.

Debt Holders

Individuals or entities that have invested by lending money to another party, expecting repayment plus interest.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, making them partial owners of the company.