{"id":26414,"date":"2025-06-19T14:11:38","date_gmt":"2025-06-19T14:11:38","guid":{"rendered":"https:\/\/gaviki.com\/blog\/?p=26414"},"modified":"2025-06-19T14:11:41","modified_gmt":"2025-06-19T14:11:41","slug":"anton-purchased-some-new-equipment-for-his-business-in-january-of-last-year","status":"publish","type":"post","link":"https:\/\/gaviki.com\/blog\/anton-purchased-some-new-equipment-for-his-business-in-january-of-last-year\/","title":{"rendered":"Anton purchased some new equipment for his business in January of last year"},"content":{"rendered":"\n

Anton purchased some new equipment for his business in January of last year. He originally purchased the equipment for 33,235 but and can now sell it for 34,156. Calculate Mark’s depreciation for his equipment this year. He did not elect Bonus or 179 depreciation.<\/p>\n\n\n\n

The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n

To calculate depreciation for Anton\u2019s equipment, we need to know the method<\/strong> and useful life<\/strong> being used for depreciation. Since Anton did not elect Bonus Depreciation<\/strong> or Section 179 Expensing<\/strong>, the most likely method being used is the Modified Accelerated Cost Recovery System (MACRS)<\/strong>, which is standard for most business property in the U.S.<\/p>\n\n\n\n

Step 1: Determine depreciation method and class life<\/h3>\n\n\n\n

For business equipment like machinery, computers, or office furniture, the IRS typically classifies them as 5-year property<\/strong> under MACRS. This means depreciation is taken over 5 years<\/strong> using the 200% declining balance method<\/strong>, switching to straight-line when advantageous, and using the half-year convention<\/strong> (assuming no mid-quarter convention applies).<\/p>\n\n\n\n

Step 2: Use MACRS depreciation table for 5-year property<\/h3>\n\n\n\n

Under MACRS 5-year schedule with the half-year convention<\/strong>, the depreciation percentages for each year are:<\/p>\n\n\n\n

    \n
  • Year 1: 20.00%<\/li>\n\n\n\n
  • Year 2: 32.00%<\/li>\n\n\n\n
  • Year 3: 19.20%<\/li>\n\n\n\n
  • Year 4: 11.52%<\/li>\n\n\n\n
  • Year 5: 11.52%<\/li>\n\n\n\n
  • Year 6: 5.76%<\/li>\n<\/ul>\n\n\n\n

    Step 3: Apply the percentage for Year 2<\/h3>\n\n\n\n

    Since Anton bought the equipment in January of last year<\/strong>, Year 1 depreciation was taken last year using 20%.
    This year (Year 2), the depreciation rate is 32%<\/strong>.<\/p>\n\n\n\n

    Now, calculate depreciation for Year 2:Depreciation for Year 2=$33,235\u00d732%=$10,635.20\\text{Depreciation for Year 2} = \\$33,235 \\times 32\\% = \\$10,635.20Depreciation for Year 2=$33,235\u00d732%=$10,635.20<\/p>\n\n\n\n

    Final Answer:<\/h3>\n\n\n\n

    Anton\u2019s depreciation for the equipment this year is $10,635.20<\/strong><\/p>\n\n\n\n

    Explanation:<\/h3>\n\n\n\n

    Depreciation allows businesses to recover the cost of property used in operations over time. Since Anton did not take accelerated options like Bonus or Section 179, he must use MACRS, which spreads out the deductions. Although the equipment’s market value<\/strong> increased to $34,156, depreciation is based only on the original cost<\/strong>, not its current resale value. The 32% rate in the second year gives him a significant deduction for tax purposes.<\/p>\n\n\n\n

    \"\"<\/figure>\n","protected":false},"excerpt":{"rendered":"

    Anton purchased some new equipment for his business in January of last year. He originally purchased the equipment for 33,235 but and can now sell it for 34,156. Calculate Mark’s depreciation for his equipment this year. He did not elect Bonus or 179 depreciation. The Correct Answer and Explanation is: To calculate depreciation for Anton\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-26414","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/26414","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=26414"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/26414\/revisions"}],"predecessor-version":[{"id":26416,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/26414\/revisions\/26416"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=26414"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=26414"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=26414"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}