Augie purchased one new asset during the year (five-year property) on november 10, 2017, at a cost of $660,000. she would like to use the § 179 election and will also take additional first-year depreciation. the income from the business before the cost recovery deduction and the § 179 deduction was $600,000. determine the total cost recovery deduction with respect to the asset for 2017.
a. $30,500
b. $320,250
c. $510,000
d. $588,750
e. none of the above

option (e)

None of the above

Explanation:

The mid quarter convention applies to this MACRS calculation.

§ 179 expense $500,000

Additional first-year depreciation= [($650,000 - $500,000) × 0.50]

$75,000 MACRS cost recovery ($75,000 × 0.05) 3,750

Total = $78,750

Income from the business before the cost is recovered is $600,000 less. Therefore, the Total cost recovered;

Total cost recovery= (78,750)

§ 179 business income limitation $521,250

Therefore, Augie's total cost recovery deduction;

= $500,000 + $78,750

= $578,750.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.