Question

Assume that Timberline Corporation has 2019 taxable income of $244,000 for purposes of computing the §179 expense. It acquired the following assets in 2019: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)

	Purchase
Asset	Date		Basis
Furniture (7-year)	December 1	$	454,000
Computer equipment (5-year)	February 28		94,000
Copier (5-year)	July 15		34,000
Machinery (7-year)	May 22		484,000
Total		$	1,066,000
b. What would Timberline’s maximum depreciation deduction be for 2019 assuming no bonus depreciation? (Round your intermediate calculations to the nearest whole dollar amount.) c. What would Timberline’s maximum depreciation deduction be for 2019 if the machinery cost $3,040,000 instead of $484,000 and assuming no bonus depreciation?

Answer 1

B.Timberline’s maximum depreciation deduction be for 2019
Year	Asset	Amount	Depreciation 2019	Book value
2019	furniture	4,54,000.00	64,857.00	3,89,143.00
2019	Computer Equipment	94,000	18,800	75,200.00
2019	Copier	34,000	6,800	27,200.00
2019	Machinery	4,84,000	69,143	4,14,857.00
2019	Maximum Total Depreciation allowable		1,59,600.00

C.Timberline’s maximum depreciation deduction be for 2019 if the machinery cost $3,040,000 instead of $484,000
Year	Asset	Amount	Depreciation 2019	Book value
2019	furniture	4,54,000.00	64,857.00	3,89,143.00
2019	Computer Equipment	94,000	18,800	75,200.00
2019	Copier	34,000	6,800	27,200.00
2019	Machinery	30,40,000	4,34,286	26,05,714.00
2019	Maximum Total Depreciation allowable		5,24,743.00

Workng Notes

Table 1 furniture
Year	Adjusted Basis	Rate %	Depreciation	Cumulative	Book Value	Method
2019	4,54,000	14.29	64,857	64,857	3,89,143	DB
2020	3,89,143	24.49	1,11,184	1,76,041	2,77,959	DB
2021	2,77,959	17.49	79,417	2,55,458	1,98,542	DB
2022	1,98,542	12.49	56,726	3,12,184	1,41,816	DB
2023	1,41,816	8.92	40,519	3,52,703	1,01,297	SL
2024	1,01,297	8.92	40,519	3,93,222	60,778	SL
2025	60,778	8.92	40,519	4,33,741	20,259	SL
2026	20,259	4.46	20,259	4,54,000	0	SL

Table 2- Computer Eqipment
Year	Adjusted Basis	Rate %	Depreciation	Cumulative	Book Value	Method
2019	94,000	20	18,800	18,800	75,200	DB
2020	75,200	32	30,080	48,880	45,120	DB
2021	45,120	19.2	18,048	66,928	27,072	DB
2022	27,072	11.52	10,829	77,757	16,243	SL
2023	16,243	11.52	10,829	88,586	5,414	SL
2024	5,414	5.76	5,414	94,000	0	SL

Table 3-Copier
Year	Adjusted Basis	Rate %	Depreciation	Cumulative	Book Value	Method
2019	34,000	20	6,800	6,800	27,200	DB
2020	27,200	32	10,880	17,680	16,320	DB
2021	16,320	19.2	6,528	24,208	9,792	DB
2022	9,792	11.52	3,917	28,125	5,875	SL
2023	5,875	11.52	3,917	32,042	1,958	SL
2024	1,958	5.76	1,958	34,000	0	SL

Table 4 Machinery
Year	Adjusted Basis	Rate %	Depreciation	Cumulative	Book Value	Method
2019	4,84,000	14.29	69,143	69,143	4,14,857	DB
2020	4,14,857	24.49	1,18,531	1,87,673	2,96,327	DB
2021	2,96,327	17.49	84,665	2,72,338	2,11,662	DB
2022	2,11,662	12.49	60,475	3,32,813	1,51,187	DB
2023	1,51,187	8.92	43,196	3,76,009	1,07,991	SL
2024	1,07,991	8.92	43,196	4,19,206	64,794	SL
2025	64,794	8.92	43,196	4,62,402	21,598	SL
2026	21,598	4.46	21,598	4,84,000	0	SL

Table 5 Machinery
Year	Adjusted Basis	Rate %	Depreciation	Cumulative	Book Value	Method
2019	30,40,000	14.29	4,34,286	4,34,286	26,05,714	DB
2020	26,05,714	24.49	7,44,490	11,78,776	18,61,224	DB
2021	18,61,224	17.49	5,31,778	17,10,554	13,29,446	DB
2022	13,29,446	12.49	3,79,842	20,90,396	9,49,604	DB
2023	9,49,604	8.92	2,71,316	23,61,711	6,78,289	SL
2024	6,78,289	8.92	2,71,316	26,33,027	4,06,973	SL
2025	4,06,973	8.92	2,71,316	29,04,342	1,35,658	SL
2026	1,35,658	4.46	1,35,658	30,40,000	0	SL