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The MACRS basis of 5-year property acquired on March 3, 20X1 is $10,000. The property is sold on November 4, 20X2. If the half-year convention applies to personal property acquired in 20X1 and regular (accelerated) MACRS is used, depreciation expense for 20X2 is: a. $2,000. b. $1,000. c. $1,600. d. $3,200. e. $2,800.

Respuesta :

Answer:

Option (c) is correct.

Explanation:

In this system,

On March 3, 20X1 =  $10,000

The property is sold on November 4, 20X2.

If an asset is sold before the end of its useful life, then a half year depreciation is usually claimed in the year of sale

The depreciation for 20 × 2, in which the asset was sold

= (1/2) x 32% x $10,000

= $1,600

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