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.
FMV at Time
Asset Purchase Price Converted to Business Use
Computer $6,100 $4,400
Printer 3,900 3,750
Desk 4,800 4,600
File cabinet 3,800 3,825

Required:
Using the above information, what is the depreciable basis that Brittany should use in her business for each asset?

The computation is shown below:

Explanation:

The computation of the depreciable basis which she should use in her business is as follows

Asset           FMV          Purchase price          Lower value of FMV and purchase price

Computer   $4,400     $6,100                        $4,400

Printer         $3,750     $3,900                        $3,750

Desk            $4,600     $4,800                       $4,600

File

cabinet        $3,825     $3,800                        $3,800

We applied the lower value of FMV and the purchase price and the same is considered as a depreciable basis

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