An Asset (Not an Automobile)placed in Service in June 2017

question 59

Multiple Choice

An asset (not an automobile) placed in service in June 2017 has a depreciable basis of $2,055,000,a recovery period of 5 years,and is the only asset placed in service during the year.Assuming bonus depreciation is used,a half-year convention,and the expensing election is made for the maximum eligible amount,what is the amount of cost that can be deducted in 2017 assuming the business earned taxable income of $1,000,000 before deducting any cost recovery?

• A)$407,000
• B)$500,000
• C)$1,000,000
• D)$1,407,000
• E)$2,000,000

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Definitions:

Amortization Expense

The periodic reduction in the book value of an intangible asset over its useful life.

Functional Currency

The currency of the primary economic environment in which an entity operates, generally used in preparing financial statements.

Capital Assets

Long-term assets acquired for operating purposes, including land, buildings, machinery, and equipment, which are not easily convertible into cash.

Exchange Rates

The equivalent worth of one currency in another during exchange.