In March 2020, Jones Company purchased a Mercedes for use in its business at a cost of $73,000. Required: Assuming no bonus depreciation or Section 179 deduction, calculate the allowable tax depreciation on this asset for 2020, 2021, and 2022. Use Table 7-1 and Table 7-2. Use the below table for annual depreciation deduction for year 2020 to 2022:2020...$ 10,1002021... 16,1002022... 9,7002023 and subsequent years... 5,760* Refer to attached images for Table 7-1 and Table 7-2 In March 2020, Jones Company purchased a Mercedes for use in its business at a cost of $73,000.Required:Assuming no bonus depreciation or Section 179 deduction, calculate the allowable tax depreciation on this asset for 2020, 2021, and2022. Use Table 7-1 and Table 7-2. Use the below table for annual depreciation deduction for year 2020 to 2022:2020$ 10,100202116,10020229,7002023 and subsequent years5,760Amount2020 depreciation2021 depreciation2022 depreciation TABLE 7.1 Recovery Periods for Tangible Business AssetsMACRS RecoveryPeriod3 years5 years7 years10 years15 years20 years25 years27.5 years39 years50 yearsTABLE 7.2 MACRS for Business Personalty (Half-Year Convention)Recovery PeriodYear3-Year5-Year7-Year123456789101112131415161718192021Assets IncludedSmall manufacturing tools, racehorses and breeding hogs, special handling devices used in foodmanufacturing.Cars, trucks, buses, helicopters, computers, typewriters, duplicating equipment, breeding anddairy cattle, cargo containers, new farming machinery and equipment.Office furniture and fixtures, railroad cars and locomotives, most machinery and equipment.Single-purpose agricultural and horticultural structures; assets used in petroleum refining, vessels,barges, and other water transportation equipment; fruit- or nut-bearing trees and vines.Certain building improvements; land improvements such as fencing, roads, sidewalks, bridges,irrigation systems, and landscaping; telephone distribution plants; pipelines; billboards; andservice station buildings.Certain farm buildings, municipal sewers.Commercial water utility property.Residential rental real property (duplexes and apartments).Nonresidential real property (office buildings, factories, and warehouses).Railroad grading or tunnel bore.10-Year15-Year10.00%5.00%18.009.5014.408.5511.527.709.226.937.376.236.555.906.555.906.565.916.555.903.285.915.905.915.905.912.9533.33%44.4514.817.4120.00%32.0019.2011.5211.525.76Depreciation Rate14.29%24.4917.4912.498.938.928.934.4620-Year3.750%7.2196.6776.1775.7135.2854.8884.5224.4624.4614.4624.4614.4624.4614.4624.4614.4624.4614.4624.4612.231

Depreciation refers to the cost or basic value of the fixed asset which is estimated over useful…

Answered: 16,100 2022... 9,700

Business

Accounting

16,100 2022... 9,700

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2022, Swifty Company purchased equipment for $41000. The company is depreciating the equipment at the rate of $820 per month. The book value of the equipment at December 31, 2022 is O $41000. O $0. O $31160. O $9840.
Assume that for a particular company, the only temporary difference for tax-effect accounting purposes relates to the depreciation of a newly acquired machine. The Machine was acquired on 1 July 2018 at the cost of $800,000. Its useful life is considered to be ﬁve years, after which time it is expected to have no residual value. For tax purposes, it can be fully written off over two years. The tax rate is assumed to be 30 per cent. Required 1 Determine whether the depreciation of the Machine will lead to a deferred tax asset or a deferred tax liability? 2 What would be the deferred tax asset balance or deferred tax liability as of 30 June 2021? 3 Briefly explain how a company calculates its current liability 'income tax payable'?
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At the beginning of the year 2019, Trunk Company has an investment property acquired at a cost of P1,700,000 that is to be accounted under the cost model. Depreciation of 10% is recognized annually and periodic continuing repair costs of P3,500 per year as well as property tax of P2,700 are incurred by the company on an annual basis. What should be the carrying value of the investment at the end of the year 2019? On April 1, 2019, Red Company purchased as a trading security a P1,000,000 face value 8% bond for P920,000 plus brokerage of P12,000 and accrued interest. The bonds mature on January 1, 2023 and pay interest annually on January 1. On December 31, 2019, the bonds had a market value of P965,000. For the year ending December 31, 2019 income statement, what amount should Red report as Unrealized gain or loss from trading securities? (Do not include any parenthesis, just amount without period or comma) Dahlia Company purchased a P2,000,000 12% face value bonds, 10…
In 2025, the controller of Green Company discovered that 2024 depreciation expense was overstated by $40,000, a material amount. Assuming an income tax rate of 25%, the prior period adjustment to 2025 beginning retained would be:
Vincent Limited paid $100,000 to purchase equipment at the beginning of 2020. Vincent Limited estimated the useful life of the equipment to be 5 years or 200,000 units. The equipment will be considered fully amortized a when the balance in the Accumulated Depreciation account reaches $100,000. The equipment produced 50,000 units in 2020. Required:a. Determine the estimated residual value of the equipment.b. What is the amortizable cost of the equipment?c. Calculate depreciation expense for 2020 under each of the following methods:i. straight-lineii. units-of-productioniii. double-declining-balanced. If you were a new accountant in a company and you were asked to determine how best to depreciate a new machine they just bought; how would you determine the best method? What is the difference between your method and other method? How does your method affect the income statement?
The following information is available for Metlock Inc. for 2024: Excess of tax depreciation over book depreciation, $77,200. This $77,200 difference will reverse equally over the next 4 years. 1. 2 3. (a) Deferral, for book purposes, of $26,000 of subscription income received in advance. The subscription income will be earned in 2025. Pretax financial income, $206,000. Tax rate for all years, 20%. Your answer is correct. Compute taxable income for 2024. (b) Taxable income 154800 Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2024. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Account Titles and Explanation deprecation Debit Credit
On January 1, 2020, Bing Company acquired equipment on credit. The terms were $8,000 cash down payment plus payments of $6,000 on January 1 for each of the next four years. The implicit interest rate was 6%. The equipment’s list price was $30,000. Additional costs of $2,000 were incurred to install the equipment. Determine the value at which Ling should report the acquired asset. Show your calculations. For any measurement involving present value concepts, provide your calculations.
On Jan. 1, 2021, Mother, Inc., whose financial year end is every Dec. 31, purchased a unit of equipment at a total cost of P10,000,000. The equipment is estimated to have a useful life of 5 years with a residual value equal to 10% of its cost. - How much is the depreciation expense for 2021 using the straight line depreciation method? - How much is the depreciation expense for 2024 using the SYD depreciation method? - How much is the depreciation expense for 2025 using the double declining balance depreciation method?
Current Attempt in Progress The following information is available for Bramble Corporation for 2024 (its first year of operations). 1. Excess of tax depreciation over book depreciation, $42,400. This $42,400 difference will reverse equally over the years 2025-2028. 2. Deferral, for book purposes, of $20,300 of rent received in advance. The rent will be recognized in 2025. 3. Pretax financial income, $272,300. 4. Tax rate for all years, 30%. (a) Your answer is correct. Compute taxable income for 2024. Taxable income $ 250200 Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2024. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Income Tax Expense Deferred Tax Asset Deferred Tax Liability Income Tax Payable Debit…
Thor, Inc reported depreciation on the income statement by the straight-line method on an asset with a four-year useful life. MACRS is used for the tax return. Income statement: $5 million each year. Tax Return: 2020 $7 million; 2021 $6 million; 2022 $4 million; 2023 $3 million. The income tax rate is 20% for all years. The current year is 2022. Which of the following statements is true regarding the differences between accounting and tax depreciation? The 2022 beginning balance in the deferred tax liability is $.6M, the 2022 difference is originating, and the desired ending balance in the 2022 deferred tax liability is $.4M. The 2022 beginning balance in the deferred tax liability is $.6M, the 2022 difference is reversing, and the desired ending balance in the 2022 deferred tax liability is $.4M. The 2022 beginning balance in the deferred tax liability is $.4M, the 2022 difference is reversing, and the desired ending balance in the 2022 deferred tax liability is $.6M. The 2022…
Computing and Reporting Deferred Income TaxesEarly in January 2019, Oler, Inc., purchased equipment costing $24,000. The equipment had a 2‑year useful life and was depreciated in the amount of $12,000 in 2019 and 2020. Oler deducted the entire $24,000 on its tax return in 2019. This difference was the only one between its tax return and its financial statements. Oler’s income before depreciation expense and income taxes was $354,000 in 2019 and $367,500 in 2020. The tax rate in each year was 25%. Requireda. What amount of deferred tax liability should Oler report in 2019 and 2020? 2019 2020 b. Prepare the journal entries to record income taxes for 2019 and 2020. General Journal Description Debit Credit Income taxes payable To record income taxes for 2019. Income tax expense To record income taxes for 2020. c. Repeat requirement b if in 2019 the U.S. enacts a permanent tax rate change to be effective in…