Required information [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) Office equipment (7-year) Furniture (7-year) Start-up costs Year 2 Assets Purchase Date October 30, Year 1 October 30, Year 1 October 30, Year 1 October 30, Year 1 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 $12,520, 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, Year 2, for $29,000 and spent $4,400 getting it ready to put into service. The pinball machine cost $5,400 an was placed in service on July 1, Year 2. Van Pinball machine (7-year) Customer list Basis $16,400 10,000 5,800 19,520 Purchase Date June 15, Year 2 July 1, Year 2 April 30, Year 2 Basis $ 33,400 5,400 12,520 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.)
Required information [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) Office equipment (7-year) Furniture (7-year) Start-up costs Year 2 Assets Purchase Date October 30, Year 1 October 30, Year 1 October 30, Year 1 October 30, Year 1 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 $12,520, 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, Year 2, for $29,000 and spent $4,400 getting it ready to put into service. The pinball machine cost $5,400 an was placed in service on July 1, Year 2. Van Pinball machine (7-year) Customer list Basis $16,400 10,000 5,800 19,520 Purchase Date June 15, Year 2 July 1, Year 2 April 30, Year 2 Basis $ 33,400 5,400 12,520 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.)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 15E: Penny Davis runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some...
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![Required information
[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
Purchase Date
Basis
Computers (5-year)
Office equipment (7-year)
Furniture (7-year)
Start-up costs
October 30, Year 1
October 30, Year 1
October 30, Year 1
October 30, Year 1
$16,400
10,000
5,800
19,520
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 $12,520, and the sale was completec
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, Year 2, for $29,000 and spent $4,400 getting it ready to put into service. The pinball machine cost $5,400 and
was placed in service on July 1, Year 2.
Year 2 Assets
Purchase Date
Basis
$ 33,400
June 15, Year 2
July 1, Year 2
April 30, Year 2
Van
Pinball machine (7-year)
5,400
12,520
Customer list
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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7b3a07d4-a240-42e2-990d-7edf78724182%2Fb690f3ee-59d5-4406-8c14-3686b07aa507%2Fkcfxsuk_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[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
Purchase Date
Basis
Computers (5-year)
Office equipment (7-year)
Furniture (7-year)
Start-up costs
October 30, Year 1
October 30, Year 1
October 30, Year 1
October 30, Year 1
$16,400
10,000
5,800
19,520
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 $12,520, and the sale was completec
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, Year 2, for $29,000 and spent $4,400 getting it ready to put into service. The pinball machine cost $5,400 and
was placed in service on July 1, Year 2.
Year 2 Assets
Purchase Date
Basis
$ 33,400
June 15, Year 2
July 1, Year 2
April 30, Year 2
Van
Pinball machine (7-year)
5,400
12,520
Customer list
Assume that eSys Answers does not claim any $179 expense or bonus depreciation. (Use MACRS Table 1, Table 2, Table 3,
Table 4 and Table 5.) (Round your intermediate calculations and final answers to the nearest whole dollar amount.)
Transcribed Image Text:Required:
a. What are the maximum cost recovery deductions for eSys Answers for Year 1 and Year 2?
c. What is eSys Answers' basis in each of its assets at the end of Year 2?
X Answer is not complete.
Complete this question by entering your answers in the tabs below.
Req A
Req C
What are the maximum cost recovery deductions for eSys Answers for Year 1 and Year 2?
Recovery
Deduction
Year 1
2$
6,611
Year 2
Req A
Req C >
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