Brittany started a law practice as a sole proprietor. She owned a computer, printer, desk, and file cabinet she purchased during lawschool (several years ago) that she is planning to use in her business.PurchaseAssetComputerPrinterDeskFile cabinetPrice$ 5,5003,3004,2003,200FHV at Time Convertedto Business Use$ 3,8003,1504,0003,225Using the above information, what is the depreciable basis that Brittany should use in her business for each asset?AssetDepreciable BasisComputerPrinterDeskFile cabinet

Answered: Using the above information, what is…

Using the above information, what is the depreciable basis that Brittany should use in her business for each asset? Asset Depreciable Basis Computer Printer Desk File cabinet

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Brittany started a law practice as a sole proprietor. She owned a computer, printer, desk, and file cabinet she purchased during law
school (several years ago) that she is planning to use in her business.
Purchase
Asset
Computer
Printer
Desk
File cabinet
Price
$ 5,500
3,300
4,200
3,200
FHV at Time Converted
to Business Use
$ 3,800
3,150
4,000
3,225
Using the above information, what is the depreciable basis that Brittany should use in her business for each asset?
Asset
Depreciable Basis
Computer
Printer
Desk
File cabinet

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