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  3. kevin and ken began a business together as equal p

Kevin and Ken began a business together as equal partners. Kevin contributed equipment with a...

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Accounting

Kevin and Ken began a business together as equal partners. Kevin contributed equipment with a fair market value (FMV) of $10,000 and adjusted basis of $7,500, and Ken contributed $10,000 in cash. They used the straight-line method over five years, with the annual depreciation being $2,000 on their books. For the purpose of this question, disregard any first-year conventions. How much tax depreciation will Kevin and Ken receive for the year and how much excess book depreciation?
Kevin: Tax, $750; Book, $1,000. Ken: Tax, $750; Book, $1,000.
Kevin: Tax, $1,500; Book, $2,000. Ken: Tax, $0; Book, $0.
Kevin: Tax, $500; Book, $1,000. Ken: Tax, $1,000; Book, $1,000.
Kevin: Tax, $0; Book, $2,000. Ken: Tax, $1,500; Book, $0.

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