A piece of construction equipment (asset class 15.0) was purchased by the Jones Construction Company in...

Transcribed Image Text:

A piece of construction equipment (asset class 15.0) was purchased by the Jones Construction Company in 2021. The cost basis was $330,000. The plan is to use the equipment and dispose it after about 8 years of service. a). Determine the MACRS-GDS and MACRS-ADS recovery periods for the equipment. b). Determine the annual GDS and ADS depreciation deductions for this property. c). If the company disposes the equipment and sells it sooner in 2023, instead of 2029, what would the the GDS and ADS depreciations for that year? d). Based on (c), what are the corresponding book values under the GDS and ADS depreciations? Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (r). a). The GDS recovery period is The ADS recovery period is b). Determine the GDS depreciation years. years. deductions for this property. (Round to the nearest dollar.) The GDS depreciation deductions, S Year 2021 2022 2023 2024 2025 2026 Determine the ADS depreciation deductions for this property. (Round to the nearest dollar) Year The ADS depreciation deductions, S 2021 2022 2023 2024 2025 2026 2027 SS c). The GDS depreciation deduction for the year 2023 would be $ (Round to the nearest dollar) The ADS depreciation deduction for the year 2023 would be $ (Round to the nearest dollar) d). The book value at end of 2023 based on GDS depreciations is $ The book value at end of 2023 based on ADS depreciations is $ (Round to the nearest dollar) dollar) Asset Class 00.11 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 22.3 24.4 28.0 30.1 32.2 34.0 36.0 37.11 37.2 48.12 49.13 49.21 79.0 Descriptions of Assets Office furniture and equipment Information systems, including computers Automobiles, taxis Buses Light general purpose trucks Heavy general purpose trucks Tractor units for use over the road Agriculture Mining Production of petroleum and natural gas Petroleum refining Construction Manufacture of carpets Manufacture of wood products and furniture. Manufacture of chemicals and allied products Manufacture of rubber products Manufacture of cement Manufacture of fabricated metal products. Manufacture of electronic components, products, and systems Manufacture of motor vehicles Manufacture of aerospace products Telephone central office equipment Electric utility steam production plant Gas utility distribution facilities Recreation Class Life 10 6 3 9 4 6 10 10 14 16 6 9 10 9.5 14 20 12 6 12 10 18 28 35 10 GDS 7 5 55553 7 7 7 10 5 5 7 5 7 15 7 5 7 7 10 20 20 7 ADS 10 STROOSSSSS5 6 4 10 10 14 16 6 9 10 9.5 4026210 18 8 35 10 28 nearest dollar) arest dollar) to the nearest dollar) the nearest dollar) Your 1 2 3 4 5 6 7 8 9 10 11 12 13 14 NESSANGE 15 16 17 18 19 20 GDS Recovery Rates (r) for the Sta Pirsonal Property Classes Recovery Period (and Property Cla) 3-year 0.3333 0.4445 0.1481 0.0741 Syear 0.2000 0:3200 0.1920 0 1152 0.1152 0.0576 I your 0.1429 0.2449 0.1749 0.1249 0.0893 0.0092 0.0093 0.0446 10 ye 0.1000 0.1800 0 1440 0.1162 0.0922 0.0737 0.0655 00655 00656 00665 00328 15-year 0.0500 0.0950 0.0855 0.0770 0.0693 0.0623 0.0590 00590 0.0591 0.0590 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 20-year 0.0375 0,0722 0.0668 0.0618 0 0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 21 These rates are determined by applying the 200% DB method (with switchover to the SL method) to the recovery period with the half-year convention applied to the first and last years. Rates for each period must sum to 1.0000 These rates are determined with the 150% DB method instead of the 200% DB method (with switchover to the SL method) and are rounded off to four decimal places A piece of construction equipment (asset class 15.0) was purchased by the Jones Construction Company in 2021. The cost basis was $330,000. The plan is to use the equipment and dispose it after about 8 years of service. a). Determine the MACRS-GDS and MACRS-ADS recovery periods for the equipment. b). Determine the annual GDS and ADS depreciation deductions for this property. c). If the company disposes the equipment and sells it sooner in 2023, instead of 2029, what would the the GDS and ADS depreciations for that year? d). Based on (c), what are the corresponding book values under the GDS and ADS depreciations? Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (r). a). The GDS recovery period is The ADS recovery period is b). Determine the GDS depreciation years. years. deductions for this property. (Round to the nearest dollar.) The GDS depreciation deductions, S Year 2021 2022 2023 2024 2025 2026 Determine the ADS depreciation deductions for this property. (Round to the nearest dollar) Year The ADS depreciation deductions, S 2021 2022 2023 2024 2025 2026 2027 SS c). The GDS depreciation deduction for the year 2023 would be $ (Round to the nearest dollar) The ADS depreciation deduction for the year 2023 would be $ (Round to the nearest dollar) d). The book value at end of 2023 based on GDS depreciations is $ The book value at end of 2023 based on ADS depreciations is $ (Round to the nearest dollar) dollar) Asset Class 00.11 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 22.3 24.4 28.0 30.1 32.2 34.0 36.0 37.11 37.2 48.12 49.13 49.21 79.0 Descriptions of Assets Office furniture and equipment Information systems, including computers Automobiles, taxis Buses Light general purpose trucks Heavy general purpose trucks Tractor units for use over the road Agriculture Mining Production of petroleum and natural gas Petroleum refining Construction Manufacture of carpets Manufacture of wood products and furniture. Manufacture of chemicals and allied products Manufacture of rubber products Manufacture of cement Manufacture of fabricated metal products. Manufacture of electronic components, products, and systems Manufacture of motor vehicles Manufacture of aerospace products Telephone central office equipment Electric utility steam production plant Gas utility distribution facilities Recreation Class Life 10 6 3 9 4 6 10 10 14 16 6 9 10 9.5 14 20 12 6 12 10 18 28 35 10 GDS 7 5 55553 7 7 7 10 5 5 7 5 7 15 7 5 7 7 10 20 20 7 ADS 10 STROOSSSSS5 6 4 10 10 14 16 6 9 10 9.5 4026210 18 8 35 10 28 nearest dollar) arest dollar) to the nearest dollar) the nearest dollar) Your 1 2 3 4 5 6 7 8 9 10 11 12 13 14 NESSANGE 15 16 17 18 19 20 GDS Recovery Rates (r) for the Sta Pirsonal Property Classes Recovery Period (and Property Cla) 3-year 0.3333 0.4445 0.1481 0.0741 Syear 0.2000 0:3200 0.1920 0 1152 0.1152 0.0576 I your 0.1429 0.2449 0.1749 0.1249 0.0893 0.0092 0.0093 0.0446 10 ye 0.1000 0.1800 0 1440 0.1162 0.0922 0.0737 0.0655 00655 00656 00665 00328 15-year 0.0500 0.0950 0.0855 0.0770 0.0693 0.0623 0.0590 00590 0.0591 0.0590 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 20-year 0.0375 0,0722 0.0668 0.0618 0 0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 21 These rates are determined by applying the 200% DB method (with switchover to the SL method) to the recovery period with the half-year convention applied to the first and last years. Rates for each period must sum to 1.0000 These rates are determined with the 150% DB method instead of the 200% DB method (with switchover to the SL method) and are rounded off to four decimal places

Answer rating: 100% (QA)

Explanation It is mentioned that the equipment purchased for construction comes under asset class 15 ... View the full answer