The Garcia Corporation Purchased $40,000 of Equipment on July 1

Essay

The Garcia Corporation purchased $40,000 of equipment on July 1, 2013. The equipment is expected to be used in the business for five years and has an estimated salvage value of $5,500. Partial MACRS tables are listed below: Required:
a) Compute the amount of depreciation that is deductible under MACRS for 2013 and 2014 assuming that the equipment is classified as 5-year property.
b) Compute the amount of depreciation that is deductible under MACRS for 2013 and 2014 assuming that the equipment is classified as 7-year property.