Kensington Corporation, Inc. (an October 31 fiscal year-end corporation) plans to purchase $2,700,000 of used office fixtures (7-year property). This will be Kensington's only personalty acquired during the year.
Kensington's management is willing to purchase and place the property in service anytime during the year to maximize its depreciation deductions.
a. Compute the depreciation expense for the first year, assuming all of the property is purchased and placed in service on June 19, 2013.
b. Compute the depreciation expense for the first year, assuming all of the property is purchased and placed in service on September 19, 2013.
c. What course of action do you recommend for Kensington?