Question: 1. Explain how the cost basis of depreciable property is determined.
2. The Parkview Hospital is considering the purchase of a new autoclave. This equipment will cost $150,000. This asset will be depreciated using an MACRS (GDS) recovery period of three years. The depreciation amount in the second year is (a) $50,000 (b) $66,675 (c) $33,338 (d) $55,563.