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Jayne Company acquires a new machine (ten-year property) on January 15, 2013, at a cost of...

Jayne Company acquires a new machine (ten-year property) on January 15, 2013, at a cost of $180,000. Jayne also acquires another new machine (seven-year property) on November 5, 2012, at a cost of $30,000. No election is made to use the straight-line method. The company does not make the § 179 election. Jayne takes additional first-year depreciation. Determine the total deductions in calculating taxable income related to the machines for 2013. a. $116,143. b. $11,143. c. $22,287. d. $132,858. e. None of the above.

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Expert Solution

a. $116,143 ,

New machine (ten-year property) on January 15, 2013 :

Additional first-year depreciation [180000 * 50% half year convention] = $90000

MACR depreciation [$90000 * 10%]                                                        = $9000

                                                                                                                = $99000

Another new machine (seven-year property) on November 5, 2013 :

Additional first-year depreciation [ $30,000 * 50% half year convention] = $15000

MACR depreciation [$15000 * 14.29%]                                                      = $2143.5

                                                                                                                               = $17143.5

Total deductions [$99000 +  $17143.5] = $116143

ekkarill92 answered 1 year ago
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