Question

At the beginning of the year, Poplock began a calendar-year dog boarding business called Griff's Palace. Poplock bought and placed in service the following assets during the year:
Asset Date Acquired Cost Basis

Computer equipment 3/23 $6,000
Dog grooming furniture 5/12 $7,000
Pickup truck 9/17 $10,000
Commercial building 10/11 $280,000
Land (one acre) 10/11 $80,000

a. Assuming Poplock does not elect §179 expensing or bonus depreciation, what is Poplock?s year 1 depreciation expense for each asset?
b. Assuming Poplock does not elect §179 expensing or bonus depreciation, what is Poplock's year 2 depreciation expense for each asset?

Answer 1

Answer:

Computer equipment:

year 1: (using 20% depreciation rate)

20% × 6000 = 1200 × (9÷12) = 900

Year 2: 1200

Dog grooming furniture:

year 1: 20% × 7000 = 1400 × (7÷12) = 817

Year 2: 7000

Pickup truck:

year 1: 20% × 10000 = 2000 × (3÷12) = 500

Year 2: 2000

Commercial building:

year 1: 20% × 280000 = 56000 × (2÷12) = 9333

Year 2: 56000

Land (one acre):

Land is not dereciated because it has infinite life.