Answer:
e. None of the above
Explanation:
Purchase Value of Machinery = $4,000,000
Life of building = 30 years
Depreciation per year (assuming no 5% residual value)
= (4,000,000 - 200,000)/30
= $ 126,667
Dep. till December 31, 2016 = 126667*21 years
= $2,660,000
Dep. till March 1, 2017 from December 31, 2016
= (122667*2)/12
= $21,111
Total Dep. till March 1, 2017 = $2,660,000 + $21,111
= $ 2,681,111
Cost of recovery deduction = $4,000,000 - $2,681,111
= $ 1,318,889
Therefore, The cost recovery deduction for the year of the sale is $ 1,318,889
