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

question 29

Multiple Choice

An asset (not an automobile) put in service in June 2017 has a depreciable basis of $35,000 and a recovery period of 5 years and is the only asset placed in service this year.Assuming bonus depreciation is used,a half-year convention,and the expensing election is made,what is the maximum amount of cost that can be deducted in 2017 (assume no income limitation) ?

• A)$7,000
• B)$17,500
• C)$21,000
• D)$24,400
• E)$35,000

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Definitions:

Equity Method

An accounting technique used to record the investments made in other companies, reflecting the investor's proportional share of the investee's net income or loss.

Undervalued Inventory

Undervalued inventory occurs when the recorded cost of inventory is less than its current market value, potentially misstating a company's financial position.

Carrying Value

The book value of an asset or liability on a company's balance sheet, calculated as the original cost minus accumulated depreciation or amortization.

Fair Value

The amount one would obtain from the sale of an asset or the cost incurred to settle a liability in a smooth transaction involving market players on the date of valuation.