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Required information Comprehensive Problem 10-77 (LO 10-1, LO 10-2, LO 10-3, LO 10-4, LO 10-5) {The following information applies to the questions displayed below.) While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees: Year 1 Assets Computers (5-year) pffice equipment (7-year) Furniture (7-year) Start-up costs Purchase Date October 30, Y1 October 30, y1 October 30, Y1 October 30, 41 Basis $ 15,000 10,000 3,000 17,000 In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $10,000, and the sale was completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation. In the summer, they purchased a small van (for transportation, not considered a luxury auto) and a pinball machine to help attract new employees). They bought the van on June 15, Y2, for $15,000 and spent $3,000 getting it ready to put into service. The pinball machine cost $4,000 and was placed in service on July 1. Y2. Year 2 Assets Basis Purchase Date June 15, Y2 Van $ 18,000 Prev 1 2 of 2 Next > Computers (5-year) Office equipment (7-year) Furniture (7-year) Start-up costs October 30, Y1 October 30, Y1 October 30, 41 October 30, 71 $ 15,000 10,000 3,800 17,600 In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $10,000, and the sale was completed on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation. In the summer, they purchased a small van (for transportation, not considered a luxury auto) and a pinball machine to help attract new employees). They bought the van on June 15, 2, for $15,000 and spent $3,000 getting it ready to put into service. The pinball machine cost $4,000 and was placed in service on July 1, Y2. Year 2 Assets Purchase Date Basis Van June 15, Y2 $ 18,000 Pinball machine (7-year) July 1, Y2 4,000 Customer list April 30, Y2 10,000 Assume that eSys Answers does not claim any 3179 expense or bonus depreciation (Use MACRS Table 1. Table 2. Table 3. Table 4 and Table 5.) (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Homework Help - Q&A from Online Tutors - Course... Upload Documents for Free Access M Connect Table 1 MACRS Half-Year Convention 20-Year 3.750% 7.219 6.677 6.177 5.713 5.285 4.888 4.522 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Depreciation Rate for Recovery Period 3-Year 5-Year 7. Year 10-Year 15-Year 33.33% 20.00% 14.29% 10.00% 5.00% 44.45 32.00 24.49 18.00 9.50 14.81 19.20 17.49 14.40 8.55 7.41 11.52 12.49 11.52 7.70 11.52 8.93 9.22 6.93 5.76 8.92 7.37 6.23 8.93 6.55 5.90 4.46 6.55 5.90 6.56 5.91 6.55 5.90 3.28 5.91 5.90 4.462 4.461 5.91 5.90 4.462 4.461 4.462 4.461 4.462 4.461 4.462 5.91 2.95 Year 17 Year 18 4.461 4.462 4.461 Year 19 2.231 Year 20 Year 21 M COGG Upload Documents for Free Access TABLE 2a MACRS Mid-Quarter Convention: For property placed in service during the first quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 35.00% 25.00% Year 2 26.00 21.43 Year 3 15.60 15.31 Year 4 11.01 10.93 Year 5 11.01 8.75 Year 6 1.38 8.74 Year 7 8.75 Year 8 1.09 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the second quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 25.00% 17.85% Year 2 30.00 23.47 Year 3 18.00 16.76 Year 4 11.37 11.97 Year 5 11.37 8.87 Year 6 4.26 Year 7 8.87 Year 8 3.34 TABLE 26 MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% 8.87 > @ Hoon Online Upload Documents for Free Acous M Connect Metodemo Year 5 11.37 8.87 Year 6 4.26 8.87 Year 7 8.87 Year 8 3.34 TABLE 2 MACRS Mid-Quarter Convention: For property placed in service during the third quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 15.00% 10.71% Year 2 34.00 25.51 Year 3 20.40 18.22 Year 4 12.24 13.02 Year 5 11.30 9.30 Year 6 7.06 8.85 Year 7 8.86 Year 8 5.53 TABLE 2 MACRS-Mid Quarter Convention: For property placed in service during the fourth quarter Depreciation Rate for Recovery Period 5-Year 7-Year Year 1 5.00% 3.57% Year 2 38.00 27.55 Year 3 22.80 19.68 Year 4 13.68 14.06 Year 5 10.94 10.04 Year 6 9.58 8.73 Year 7 8.73 Year 8 7.64 OR Assume that eSys Answers does not claim any $179 expense or bonus depreciation. (Use MACRS Table 1. Table 2. Table 3. Table 4 and Table 5.) (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Comprehensive Problem 10-77 Part a and Part Required: a. What are the maximum cost recovery deductions for eSys Answers for Y1 and Y2? c. What is eSys Answers's basis in each of its assets at the end of Y2? Complete this question by entering your answers in the tabs below. Req A Reg C What are the maximum cost recovery deductions for eSys Answers for Y1 and Y2? Recovery deductions Y 1 Y2 Regc > Prev 1 2 of 2 Next > Required information Req A Reg C What is eSys Answers's basis in each of its assets at the end of Y2? Original Basis Adjusted Basis Immediate Year 1 Cost Expense Recovery Asset Year 2 Cost Recovery Yr 2 Ending Basis Computer Equipment Office Equipment Furniture Start-up costs Van Pinball machine Customer List Totals Reg A Rece Prev 1 2 of 2 Next >

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