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On January 1, 2016, Iowa Company purchased a delivery truck for $32,000. The van was estimated to have a 5-year useful life or 100,000 miles. Salvage value was estimated at $2,000. The van was driven 25,000 miles in 2016 and 22,000 miles in 2017. For income tax purposes, Iowa Company uses the modified accelerated cost recovery system (MACRS); table shown below: |
| Year | 5-Year Property, % |
| 1 | 20.00 |
| 2 | 32.00 |
| 3 | 19.20 |
| 4 | 11.52 |
| 5 | 11.52 |
| 6 | 5.76 |
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What is the maximum amount of depreciation expense for income tax purposes that Iowa Company will record for 2016 and 2017 assuming the truck is 5-year property? |
A) $4,287 in 2016; $7,347 in 2017
B) $4,573 in 2016; $7,837 in 2017
C) $6,400 in 2016; $10,240 in 2017
D) $6,000 in 2016; $9,600 in 201
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