Stone Age Concrete Inc purchased March 14 2001 The equipment

Stone Age Concrete. Inc., purchased March 14. 2001. The equipment is used for business 100 % of the time. As the accountant, you have elected to take the maximum section 179 deduction. What is the basis for depreciation of this equipment? Prepare a depreciation schedule for the first five years of operation of this equipment by using MACRS.

Solution

a> The cost of the cement making equipment cannot be recovered in the year it is purchased that is (14th march 2001 - 14th march 2002) (unless we are able to do so through bonus depreciation or the expensing election). Usually, we would recover the cost of the equipment over time, using depreciation deductions.

The depreciable basis of the cement making Equipment are :

Equipment acquired by purchase. The depreciable basis is equal to the equipments purchase price, minus any discounts, and plus any (sales taxes, delivery charges, and installation fees).