George Purchases Used Seven-Year Class Property at a Cost of $200,000

question 31

Multiple Choice

George purchases used seven-year class property at a cost of $200,000 on April 20,2016.Determine George's cost recovery deduction for 2016 for alternative minimum tax purposes,assuming George does not elect § 179 and does not take additional first-year depreciation,if available.

• A)$2,500
• B)$10,000
• C)$14,280
• D)$28,580
• E)None of the above

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Definitions:

Ending Inventory

The total value of all unsold goods a company has at the end of an accounting period.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the basic profitability of the products or services sold.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the price of a product.

Idle Capacity

Unused or underutilized resources within a business, often indicating inefficiency, where machinery, space, or labor is not being employed to full capacity.