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Accounting

Problem:

Michelle is an employee who must use her personal automobile for employment-related business trips. During 2014, Michelle drives her car 60% for business use and incurs the following total expense (100% use of car):

Gas and oil	$ 9,000
Repairs	1,400
Depreciation	4,700
Insurance and license fees	1,300
Parking and tolls (business related)	100
	$ 16,500

Michelle drives her car a total of 40,000 miles (24,000 business miles) during 2014 and receives a reimbursement of $0.40 per business mile from her employer. Assume that an adequate accounting was made to Michelle's employer.

Required:

Question 1: What amount is deductible (before the 2% nondeductible floor) if Michelle uses the standard mileage rate method?

Question 2: What amount is deductible (before the 2% nondeductible floor) is Michelle uses the actual cost method?

Note: Be sure to show how you arrived at your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91164848

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