PROBLEM #8

Use for Questions 17-19

R&R purchased a piece of equipment on October 18, 20X1. The details below describe that purchase and the remainder of their fixed asset purchases during the year:

Purchase Price of Equipment

$50,000

Residual Value on Equipment

$-

Recovery Period per IRS Guidelines

7 years

Total Assets Purchased During the Year (Excluding the New Equipment)

$180,000

Amount of Total Assets Purchased in Q4 (Excluding the new asset if it was purchased in Q4)

$60,000

Assume we disposed of the asset on:

May 16, 20X3

Assume we were offered the following amount for our asset on the disposition date:

$35,000

17. Will we use the Half-Year or Mid-Quarter Convention for this Asset?

Mid-Quarter Convention

Half-Year Convention

18. What is the amount of depreciation recognized in Year 20X2? Enter the amount as a positive whole number and no symbols.

19. What is the amount of Gain or Loss recognized on the disposition? Enter a Gain as a positive number or a Loss as a negative number or Zero if neither is recognized. Do not use any symbols.