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Depreciation, Amortization, Depletion Complete Questionsl $12.99
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Depreciation, Amortization, Depletion Complete Questionsl

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T/F: You can depreciate personal property. - correct answer False T/F: You can depreciate inventory. - correct answer False - Inventory is technically held primarily for the sale to customers in the ordinary course of busi...

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  • October 12, 2024
  • 5
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • depreciation amortization depletion

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  • AMORTIZATION
  • AMORTIZATION

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Depreciation, Amortization, Depletion

T/F: You can depreciate personal property. - correct answer False



T/F: You can depreciate inventory. - correct answer False - Inventory is technically
held primarily for the sale to customers in the ordinary course of business.



T/F: You can deduct certain land preparation costs (grading, clearing, seeding, planting). - correct answer
True - If they have a determinable life (closely associated with business purpose).



How do you calculate the depreciation each year when the straight line method is used? - correct
answer (Adjusted Basis - Salvage Value ) / Estimated Useful Life



What are the basics of the Accelerated Cost Recovery System (ACRS)? - correct answer
- Introduced by Economic Recovery Tax Act of 1981.

- Based on recovery periods instead of useful life.

- MACRS replaced ACRS for property placed into service after 1986.



What are the basics of the Modified Accelerated Cost Recovery System (MACRS)? - correct answer
- 2 Depreciation Systems (General Depreciation System (GDS) and the Alternative Depreciation System
(ADS)).



When do you have to use Alternative Depreciation System (ADS)? - correct answer -
Listed property used 50% or less in a qualified business use.

- Any tangible property use predominantly outside the United States during the year.

- Any tax-exempt use property.

- Any tax-exempt use property.



Does ADS or GDS have the 9 property classifications for depreciation? - correct answer
GDS

, What items receive 3-year depreciation treatment? - correct answer - Tractors

- Race horses

- Qualified rent-to-own property



What items receive 5-year depreciation treatment? - correct answer - Autos

- Computers

- Office Equipment



What items receive 7-year depreciation treatment? - correct answer - Office
Furniture and Fixtures



What items receive 27.5-year depreciation treatment? - correct answer - Rental
Homes



What items receive 39-year depreciation treatment? - correct answer - Office
Buildings



What type of convention do non-residential real property and residential rental property use? - correct
answer Mid-Month Convention



What does a convention allow you to do? - correct answer Determines the number
of months for which you can claim depreciation in the year you place the property into service and the
year you dispose of the property.



What does a mid-month convention period allow you to do? - correct answer All
property placed in service or disposed of during a month as placed in service or disposed of at the
midpoint of the month. In other words, 1/2 month depreciation is allowed for the month the property is
placed in service or disposed of.



What are the 3 depreciation methods allowed for GDS? - correct answer - 200%
Declining Balance Over GDS Recovery Period ( / -year)

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