Whittenburg Gerald E., Altus-Buller Martha. Income Tax Fundamentals
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Chapter 7
Accounting Periods
and Methods and
Depreciation
LEARNING OBJECTIVES
.............................................. .........................
After completing this chapter, you should be able to:
LO 7.1 Determine the different accounting periods and methods
allowed for tax purposes.
LO 7.2 Understand the concept of depreciation and be able to
calculate depreciation expense using the MACRS tables.
LO 7.3 Identify when a Section 179 election to expense the cost
of property may be used.
LO 7.4 Apply the limitations placed on depreciation of ‘‘listed
property’’ and ‘‘luxury automobiles.’’
LO 7.5 Understand the tax treatment for goodwill and certain
other intangibles.
LO 7.6 Determine whether parties are considered related for tax
purposes, and classify the tax treatment of certain related-
party transactions.
Overview
Taxpayers operating a business, whether professional, rental, manufacturing, or another
activity, should have an understanding of the accounting periods (calendar, fiscal, or
short-period tax years) and accounting methods (cash, accrual, or hybrid methods) allowed.
This chapter beg ins by addressing how and when in dividual, partn ership, and corporate
taxpayers should repo rt taxable income.
The calculation of depreciation of business assets is also an important issue for most
businesses. The Modified Accelerated Cost Recovery System (MACRS) is the tax depreci-
ation method currently in use under U.S. tax law. There are many special depreciation pro-
visions which are discussed in this chapter including bonus depreciation, the election to
expense (Section 179), and the limitations on ‘‘listed property’’ and ‘‘luxury’’ automobiles.
The chapter covers the tax treatment of goodwill, going-concern value, covenants not to
compete, franchises, trademarks, and other intangibles. Also covered is the limitation on
the deduction of losses realized in certain related-party transactions.
7-1
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SECTION 7.1
ACCOUNTING PERIODS
Individual Tax Years
Almost all individuals file tax returns using a calendar year accounting period. Individuals
reporting tax income on a fiscal year other than a calendar year are extremely rare since the
tax system is set up to accommodate calendar-year taxpayers. However, there are no
restrictions on an individual taking a tax year other than a calendar year. The choice to
file on a fiscal year basis m ust be made with an initial tax return, and books and records
must be kept on that basis. An individual may also request IRS approval to change to a fiscal
year if certain conditions are met.
Partnership and Corporation Tax Years
Many individual tax returns include the pass-through of income from partnerships, S corpo-
rations, and personal service corporations. The income or loss from partnerships and S cor-
porations is passed through on Schedule K-1 to the owners and taxed in the owners’ personal
tax returns. Partnerships and S corporations are not taxable entities, only reporting entities.
Similarly, wages are passed through to doctors, lawyers, accountants, and other professionals
from personal service corporations owned by them. Many individuals carry on businesses in
partnership or corporate entities which comprise a large part of the income shown in their
tax returns. Other individuals make investments, including the operation of real estate rental
activities, in these entities. Because the pass-through of income and loss from partnerships
and corporations plays such a large role in the taxation of many individuals, it is important
to understand the rules governing the allowed accounting periods for these entities.
Partnerships and corporations had a great deal of freedom in selecting a tax year in the
past. However, Congress decided that this freedom often resulted in an ina ppropriate
deferral of taxable income. For example, if an individual taxpayer has a calendar tax year
and receives income from a partnership with a tax year ending September 30, the taxpayer
is able to defer 3 months of partners hip income for an indefinite period of time. Therefore,
the tax law was changed to include provisions that specify the required tax year for many
partnerships and corporations, reducing the opportunities for deferring income.
The first set of provisions controlling the selection of tax years applies to partnerships.
They provide, generally, that a partners hip must adopt the same tax year as that of the part-
ners owning a majority interest (greater than 50 percent) in partnership profits and capital.
If a majority of the partners do not have the same tax year, the partnership is required to
adopt the tax year of all of its principal partners (partners with at least a 5 percent interest
in profits or capital). If the principal partners have different tax years, the partnership, gen-
erally, is required to use the least aggregate deferral method (see a standard tax service for
this calculation). As a general rule, S corporations, which allow a pass-throug h of income
and loss to individual shareholders in a manner similar to partnerships, must adopt a cal-
endar year under similar rules.
EXAMPLE EFG Partnership is owned equally by three partners, Elm Corporation,
Fig Corporation, and Grape Corporation. The partners have the
following tax year-ends:
Partner Tax Year-End
Elm Corporation September 30
Fig Corpora tion September 30
Grape Corporation December 31
7-2 Chapter 7
Accounting Periods and Methods and Depreciation
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Since partners owning a majority interest (Elm and Fig) have a Sep-
tember 30 year-end, the partnership, generally, must also adopt a
September 30 year-end. N
Partnerships and S corporations may elect to adopt a fiscal tax year different from the
one prescribed by the rules above, if one of the following conditions is met:
1. A business purpose for the fiscal year can be demonstrated, or
2. The partnership or S corporation’s fiscal year does not result in a deferral period of
more than 3 months or more than the deferral period in existence before the change
to the new fiscal year, whichever is shorter, and the partnership or S corporation
agrees to make the annual ‘‘required tax payment.’’
Partnerships and S corporations generally do not pay taxes. The ‘‘required tax payment’’
is essentially a non-interest-earning deposit with the IRS. The amount of the deposit is
increased or decreased annually with additional payments or refunds. This adjusted deposit
prov ides the IRS with a cash flow approximately equal to the partners’ or S corporation
shareholders’ deferred taxes as a result of using a fiscal year different from the one pre-
scribed by law. The deposit is required to be made by May 15 of the following year.
The only business purpose the IRS will recognize for the adoption of a fiscal tax year
other than a calenda r year fo r individuals, partnerships, or S corporation s is the need to
conform to a natural business year, based on the cyclical nature of income or inventory lev-
els. Normally, only seasonal businesses have natural business years.
EXAMPLE Sue owns a ski resort that has a natural business cycle from November
to April each year. The IRS would probably allow Sue to change her
tax year to the fiscal year ended April 30 for the business purpose of
corresponding to the natural business cycle. N
The deferral period is the period from the end of the partnership’s or S corporation’s
fiscal year to the end of the calendar year. The estimated taxes are computed by multiply-
ing the estimated deferral period taxable income by the highest individual tax rate plus
1 percent, or 36 percent (35 percent maximum individual tax rate þ 1 percent) for 2010.
To estimate the deferral period taxable income, the taxpayer uses the average monthly
income for the immediately preceding fiscal tax year (the base year).
EXAMPLE Guava Associates is a partnership with a 3-month deferral period and
taxable income of $60,000 for its prior fiscal tax year ended September
30. Guava’s average monthly income is $5,000 ($60,000/12 months),
and the partnership’s estimated taxable income for the deferral period
would be $15,000 ($5,000 3 months). To determine Guava’s esti-
mated tax for the deferral period, the estimated taxable income would
be multiplied by the highest individual tax rate plus 1 percent. The esti-
mated tax for the deferral period would then be reduced by the
amount of the required tax payment made by Guava for the previous
year to arrive at Guava’s required tax payment for the current year.
The required tax payment is due on May 15 of the calendar year fol-
lowing the calendar year in which the partnership’s tax year ends. N
EXAMPLE Lilac, Inc., is an S corporation with an October 31 year-end. For the
fiscal year ended October 31, 2010, Lilac, Inc., had taxable income of
$240,000, and had made a required tax payment of $3,000 for the
previous year. For the fiscal year ending October 31, 2010, Lilac, Inc.,
Section 7.1
Accounting Periods 7-3
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must make a required tax payment of $11,400 by May 15, 2011, as
calculated below.
Estimated taxable income for the
deferral period
$40,000 ¼ [($240,000/12
months) 2 months]
Estimated taxes for the deferral
period
$14,400 ¼ [$40,000 36%
(max. rate þ 1%)]
Required tax payment $11,400 ¼ ($14,400$3,000) N
A personal service corporation is a corporation whose shareholder-employees (any
employee who owns stock either directly or in directly) provide personal services, such as
medical, accounting, legal, actuarial, or consulting services, for the corporation’s patients
or clients. Personal service corporations generally must adopt a calendar year-end. How-
ever, they may adopt or retain a fiscal year if one of the following requirements can be met:
1. A business purpose for the fiscal tax year can be demonstrated, or
2. The fiscal tax year results in a deferral period of no more than 3 months or the deferral
period of the tax year being changed, whichever is shorter, and (1) the corporation
pays the shareholder-employees’ salaries for the deferral period at least proportionate
to the salaries received for the most recent fiscal year, or (2) the corporation limits its
deduction for shareholder employees’ salaries as described in the next paragraph.
EXAMPLE Jacaranda Corporation is a personal service corporation which paid its
owner, Michael, a salary of $96,000 for the corporation’s fiscal year
ended September 30, 2010. The corporation can continue to use its
fiscal year and deduct all of Michael’s salary, providing that Michael
receives salary during the period October 1 through December 31,
2010, of at least $24,000 (3/12 $96,000). N
If the shareholder-employees do not r eceive at least t he required amount of salary for
the deferral period, the corporation may, under certain conditions, retain its fiscal tax
year. In such a case, the deduction for salary expense for the fiscal year that includes the
deferral period will be limited based on a required formula.
Once taxpayers have adopted a calendar or fiscal tax year, they must continue to use the
same tax period unless approval for a change is granted by the IRS.
Short Period Taxable Income
If taxpayers have a short year other than their first or last year of operations, they are
required to an nualize their taxable income to calculate the tax for the short period. The
tax liability is calculated for the annualized period and allocated back to the short period.
EXAMPLE Omoto Corporation obtains permission to change from a calendar year
to a tax year ending August 31. For the short period, January 1 through
August 31, 2010, the corporation’s taxable income was $40,000. Omoto
Corporation’s tax for the short period is calculated as follows:
Step 1: Annualize the income $40,000 12/8 ¼
$60,000
Step 2: Tax on annualized income 15% $50,000 ¼ $ 7,500
25% $10,000 ¼
2,500
$10,000
Step 3: Short period tax $10,000 8/12 ¼
$ 6,667
N
7-4 Chapter 7
Accounting Periods and Methods and Depreciation
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The calculation of short-year taxable income for individuals requires special adjust-
ments. For example, deductions must be itemized for the shor t period, and the standard
deduction is not allowed. Exemptio ns also must be prorated for the short period. As a gen-
eral rule, individual taxpayers rarely change tax years.
SECTION 7.2
ACCOUNTING METHODS
The tax law requires taxpayers to report taxable income using the method of accounting
regularly use d by the taxpayer in keeping his or her books, providing the method clearly
reflects the taxpayer’s income. The cash rec eipts and disbursements (cash) method, the
accrual method, and the hybrid method are accounting methods specifically recognized
in the tax law.
The cash receipts and disbursements method of accounting is used by most individuals for
their overall method of accounting. Generally wages, interest and dividend income, capital
gains, and personal deductions are accounted for on the cash basis for individuals. Individuals
may choose to account for a particular business, such as a sole proprietorship reported on
Schedule C, using the accrual or hybrid method of accounting. If a taxpayer has two busi-
nesses, a different method of accounting may be used for each. The choice of a tax account-
ing method is a general rule which will be overridden by tax laws for some items of income
and expense. For example, individuals reporting on a cash basis may deduct IRAs or pension
contributions which are paid in cash in the year following the deduction, the income from
savings bonds may be included in taxable income even though it is not received in cash,
and prepaid interest may not be allowed as a deduction in the year paid.
The cash receipts and disbursements method results in the recognition of income when
it is actually or constructively received; deductions are recognized in the year of payment.
Taxpayers on the accrual basis generally recognize income when it is earned, regardless of
when it is received, and generally recognize deductions when they are incurred, regardless
of when they are paid. Cash basis taxpayers may not use the cash method for all expenses.
Tax provisions require cash basis taxpayers to use the accrual basis for prepayments of
interest and rent. Interest and rent expense cannot be deducted when they are prepaid.
Conversely, accrual basis taxpayers who receive certain types of prepaid income, such as
rent in advance, must generally recognize the income on the cash basis.
EXAMPLE On December 1, 2010, Carol entered into a lease on a building for
use in her business for $2,000 per month. Under the lease terms,
Carol pays 6 months’ rent ($12,000) in advance on December 1. Carol
may deduct only 1 month ’s rent ($2,000) for the calendar year ended
December 31, 2010, even though she is a cash basis taxpayer. The tax-
payer receiving the rent must report all $12,000 as income even if he
or she is an accrual basis taxpayer. N
The accrual method of accounting requires that income be recognized when (1) all
events have occurred which fix the right to receive the income, and (2) the amount of
Self-Study Problem 7.1
Juniper Corporation has taxable income of $48,000 for the short period ended
on October 31, 2010. Calculate Juniper Corporation’s short-period tax for the
period January 1 through October 31, 2010. (The corporate tax rates are pre-
sented in Chapter 1.)
$ _____________
Section 7.2
Accounting Methods 7-5
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income can be estimated with reasonable accuracy. An expense is deductible in the year in
which all events have occurred that determine a liability exists and the amount can be esti-
mated with reasonable accuracy. Also, ‘‘economic performance’’ must occur before an
accrual basis deduction can be claimed. Economic performance means that all activities
related to the incurrence of the liability have been performed. For example, economic per-
formance occurs for the purchase of services when the taxpayer uses the services.
A hybrid method of accounting involves the use of both the cash and accrual methods of
accounting. The tax law permits the use of a hybrid method, providing the taxpayer’s
income is clearly reflected by the method. An example of a hybrid method is the use of
the accrual method for cost of products sold by the business and the use of the cash method
for income and other expenses.
Taxpayers make an election to use an accounting method when they file an initial tax
return and use that method. To change methods, taxpayers must obtain permission from
the IRS.
The cash method allows a certain amount of flexibility in tax planning. Payment
of business expenses may be accelerated before year-end to generate additional
deductions, if desired. In addition, billings for services may be postponed at year-
end so payment won’t be received and included in income until the following
year. Some itemized deductions such as property taxes, state income taxes, and
charitable contributions may also be paid before year-end for an immediate
deduction.
Restrictions on the Use of the Cash Method
The tax law contains certain restrictions on use of the cash method of accounting. Regular
corporations, partnerships that have a regular corporation as a partner, and tax-exempt
trusts with unrelated business income are generally prohibited from using the cash method.
However, this requirement does not apply to farming businesses, qualified personal service
corporations, and entities with average annual gross receipts of $5,000,000 or less.
EXAMPLE Orange Associates is a manufacturer of panty hose with gross receipts
of $25,000,000. Orange is a partnership which has Lemon Corporation
as one of its partners. Orange would not be allowed to use the cash
method of accounting for tax purposes. N
Self-Study Problem 7.2A
Melaleuca, Inc., is an accrual basis taxpayer with the following transactions
during the calendar tax year:
Accrual business income (except rent and interest) $63,000
Accrual business expenses (except rent) 42,000
Three months’ rent received on a leased building on
November 1 of this year 9,000
Prepaid interest for 1 year received on a note on July 1
of the current year 12,000
Six months’ rent paid on Decembe r 1 for business property 7,200
Calculate Melaleuca, Inc.’s, net income for this year. $ ________
7-6 Chapter 7
Accounting Periods and Methods and Depreciation
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The IRS will pay informants cash rewards based on the value of the information
they furnish and the amount recovered from the target of the investigation.
The official IRS form for snitching is Form 211, ‘‘Application for Reward for Orig-
inal Information.’’ Informants may receive up to 30 percent of what the IRS
eventually collects as a result of the information provided.
SECTION 7.3DEPRECIATION
Since many assets are used in the production of income over a number of years, income is
not properly measured if the entire cost of these assets is deducted when the assets are pur-
chased. Depreciation is the accounting process of allocating and deducting the cost of an
asset over a period of years. The term depreciation does not necessarily mean physical dete-
rioration or loss of value of the asset. In fact, in some cases the value of the asset may
increase while it is being depreciated . Certain assets, such as land, cannot be depreciated
for tax purposes. These assets remain on the taxpayer’s records at their original cost.
It is important to distinguish maintenance expenses from depreciation. Depreciation
expense is the deduction of a portion of the original cost of the asset, whereas maintenance
expenses are those expenditures incurred to keep the asset in go od operati ng order. For
example, a taxpaye r who purchases a truck for use in his business depreciates the cost of
the truck over a period of years. Maintenance costs such as tires and repai rs are deducted
in the year they are incurred.
The simplest method of depreciation is the straight-line method. Use of the straight-
line method results in an equal portion of the co st being deducte d in each period of the
asset’s life. Straight-line depreciation expense is calculated by dividing the cost by the
asset’s estimated useful life. The formula is:
Cost
Estimated useful life
¼ Depreciation for the period
EXAMPLE Wilson purchases an asset for use in his business. The asset cost $14,400
on October 1, 20X1, and has a 3-year (36-month) useful life. Deprecia-
tion is calculated as follows:
$14,400
36 months
¼ $400 per month
Self-Study Problem 7.2B
Indicate whether or not each of the following entities may use the cash
method for tax purposes during 2010.
Yes or No
1. A corporation engaged in orange farming _____________
2. A dentist with a personal service corporation _____________
3. A corporate car dealer with sales of $8,000,000 per year _____________
4. A corporation engaged in certified public accounting _____________
Section 7.3
Depreciation 7-7
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
The depreciation for each year is displayed in the following table:
Year Months Rate Depreciation Deduction
X1 3 $400 $ 1,200
X2 12 400 4,800
X3 12 400 4,800
X4 9 400
3,600
Total depreciation deduction
$14,400
At the end of 36 months, the asset has a basis of 0. N
The calculation of depreciation expense for tax purposes involves certain conventions
and limitations which are not reflected in the previous example. The example is intended
to illustrate the concept of depreciation expense as an allocation of the cost of an asset over
the asset’s estimated useful life. If more information is needed about depreciation, see any
standard financial accounting textbook.
The regular straight-line depreciation method described above may be used for financial
accounting purposes and for calculating tax depreciation expense on assets acquired before
1981. The tax depreciation rules for assets acquired after 1980 are described in the follow-
ing sections.
SECTION 7.4
MODIFIED ACCELERATED COST RECOVERY
SYSTEM (MACRS)
For tax years after 1980, modifications in the tax law were made to encourage capital
investment. As a major part of this tax law change, the Accelerated Cost Recovery System
(ACRS) was enacted and later modified in 1986 to become the current tax depreciation sys-
tem referred to as the Modified Accelerated Cost Recovery System (MACRS). The current
system allows taxpayers who invest in capital assets to write off an asset’s cost over a period
designated in the tax law and to use an accelerated method for depreciation of assets other
than real estate. The minimum number of years over w hich the cost of an asset may be
Self-Study Problem 7.3
On March 1, 20X1, Jack purchases office equipment for use in his business. The
equipment cost $3,500 and has a 5-year (60-month) estimated useful life. Cal-
culate the depreciation expense for the following years, assuming the regular
straight-line depreciation method (used for financial accounting purposes or
for pre-1981 assets) is used.
Year Depreciation Deduction
20X1 $ ____________
20X2 $ ____________
20X3 $ ____________
20X4 $ ____________
20X5 $ ____________
20X6 $ ____________
Total $ ____________
7-8 Chapter 7
Accounting Periods and Methods and Depreciation
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
deducted (the recovery period) depends on the type of the property and the year in which the
property was acquired. The recovery periods are based on asset depreciation ranges (ADR) as
published by the IRS. A schedule of the recovery periods for assets acquired after 1986 is pre-
sented in Table 7.1. The recovery period classification for assets acquired after 1980, but
before 1987, differs from the recovery period classification presented in Table 7.1.
Under the MACRS system, taxpayers calculate the depreciation of an asset using a table
which contains a percentage rate for each year of the property’s recovery period. The
yearl y rate is applied to the cost of the asset. The cost of the property to which the rate
is applied is not reduced for prior years’ depreciation. For personal property (all property
except real estate) acquired after 1986, the percentages in Table 7.2 on the next page apply.
For depreciable property acquired after 1980, but before 1987, a separate table of rates
applies.
EXAMPLE Assume a taxpayer acquires an asset (5-year class property) in 2010
with a cost basis of $15,000 and uses accelerated depreciation under
MACRS. The depreciation expense deduction for each year of the
asset’s life is calculated (using the percentages in Table 7.2) as follows:
Year Percent Cost Deduction
2010 20.00 $15,000 ¼ $ 3,000
2011 32.00 15,000 ¼ 4,800
2012 19.20 15,000 ¼ 2,880
2013 11.52 15,000 ¼ 1,728
2014 11.52 15,000 ¼ 1,728
2015
5.76 15,000 ¼ 864
Totals
100.00% $15,000
N
In the above example, note that even though the asset is 5-year class property, the cost is
written off over a period of 6 tax years. This is due to the convention under MACRS which
TABLE 7.1
Recovery
Period
Recovery
Method Assets
3-year 200% declining
balance
ADR midpoint life of 4 years or less, excluding cars and light
trucks.
5-year 200% declining
balance
ADR midpoint life of more than 4 years but less than 10 years,
cars and light trucks, qualified technological equipment, certain
energy property, R&D property, computers, and certain equipment.
7-year 200% declining
balance
ADR midpoint life of 10 years or more but less than 16 years and
property without an ADR life (e.g., most business furniture and
certain equipment).
10-year 200% declining
balance
ADR midpoint life of 16 years or more but less than 20 years,
including trees and vines.
15-year 150% declining
balance
ADR midpoint life of 20 years or more but less than 25 years,
including treatment plants.
20-year 150% declining
balance
ADR midpoint life of 25 years or more, other than real property
with an ADR life of 27.5 years or longer and municipal sewers.
27.5-year Straight-line Residential rental real estate, elevators, and escalators.
39-year Straight-line Other real property purchased generally on or after May 13, 1993
(previously 31.5-year straight-line).
Section 7.4
Modified Accelerated Cost Recovery System (MACRS) 7-9
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provides for 6 months of depreciation during the year the asset is first acquired and
6 months of depreciation during the year the asset is sold or disposed of. This convention
is referred to as the half-year convention since only one-half year of depreciation is allowed
in both the year of acquisition and the year of disposition, regardl ess of the actual acqui-
sition and disposition dates. The half-year convention is built into the rates in Table 7.2.
For property (other than real estate) acquired after 1986, a taxpayer may elect to use
straight-line depreciation instead of the accelerated depreciation rates under MACRS. The
taxpayer must use the straight-line MACRS tables for assets for which a straight-line election
has been made. The annual percentage rates to be applied to the cost of an asset for which a
straight-line election under MACRS has been made are presented in Table 7.3.
EXAMPLE On April 1, 2010, Lori purchased and placed in service a computer for
use in her business. The computer cost $18,000 and Lori elects to use
straight-line depreciation over 5 years instead of accelerated depreciation
under MACRS. The annual deduction for depreciation over the life of the
computer is calculated below (the percentages are taken from Table 7.3).
Year Percent Cost Deduction
2010 10.00 $18,000 ¼ $ 1,800
2011 20.00 18,000 ¼ 3,600
2012 20.00 18,000 ¼ 3,600
2013 20.00 18,000 ¼ 3,600
2014 20.00 18,000 ¼ 3,600
2015
10.00 18,000 ¼ 1,800
Totals
100.00% $18,000
TABLE 7.2
Accelerated Depreciation for Personal Property Assuming Half-Year Convention
(For Property Placed in Service after December 31, 1986)
Recovery
Year
3-year
(200% DB)
5-year
(200% DB)
7-year
(200% DB)
10-year
(200% DB)
15-year
(150% DB)
20-year
(150% DB)
1 .................33.33 20.00 14.29 10.00 5.00 3.750
2 .................44.45 32.00 24.49 18.00 9.50 7.219
3 .................14.81* 19.20 17.49 14.40 8.55 6.677
4 ...................7.41 11.52* 12.49 11.52 7.70 6.177
5 ...........................................11.52 8.93* 9.22 6.93 5.713
6 .............................................5.76 8.92 7.37 6.23 5.285
7 ...................................................................... 8.93 6.55* 5.90* 4.888
8 ...................................................................... 4.46 6.55 5.90 4.522
9 ................................................................................................ 6.56 5.91 4.462*
10................................................................................................. 6.55 5.90 4.461
11................................................................................................. 3.28 5.91 4.462
12.........................................................................................................................5.90 4.461
13.........................................................................................................................5.91 4.462
14.........................................................................................................................5.90 4.461
15.........................................................................................................................5.91 4.462
16.........................................................................................................................2.95 4.461
17.................................................................................................................................................. 4.462
18.................................................................................................................................................. 4.461
19.................................................................................................................................................. 4.462
20.................................................................................................................................................. 4.461
21.................................................................................................................................................. 2.231
* Switch to straight-line depreciation.
7-10 Chapter 7
Accounting Periods and Methods and Depreciation
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