2021
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A: EXPLANATION WITH WORKING
ABC Inc. acquired the following five-year assets in 2021:
a. Asset A - January 10 - $106,000 b. Asset B - July 5 - $70,000 c. Asset C - September 15 - $2,424,000
ABC, Inc. elects the maximum §179 expense deduction (assume sufficient income to absorb the §179 deduction in 2021) and no bonus
What is the depreciation expense in 2022 with respect to these assets?
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- On January 1, 2021, Moo Company sold an asset with a carrying amount of P6,000,000 to Boo Company for P8,000,000. The asset had a fair value of P7,500,000 and a remaining useful life of six years. The asset was immediately leased back to Moo Company for a term of four years and annual rentals of P1,500,000 payable every yearend. The transfer qualified for as a sale and the lease was accounted for as a finance lease with an implicit interest rate of 12%. How much is the 2021 net income/loss of Moo Company relating to the sale and leaseback transaction? [Indicate whether it is a gain or loss] How much is the 2021 net income/loss of BooCompany relating to the sale and leaseback transaction? [Indicate whether it is a gain or loss] How much is the carrying amount of Moo Company's asset as of yearend 2021? How much is the 2022 net income/loss of Moo Company relating to the sale and leaseback transaction? [Indicate whether it is a gain or loss] How much is the 2022 net income/loss of Boo…Ventura Corporation purchased machinery on January 1, 2019 for ₱840,000. The company used the sum-of-the-years’-digits method and no salvage value to depreciate the asset for the first two years of its estimated six-year life. In 2020, Ventura changed to the straight-line depreciation method for this asset. The following facts pertain: 2019 2020Straight-line ₱140,000 ₱140,000Sum-of-the-years’-digits 240,000 200,0001. Ventura is subject to a 40% tax rate. The cumulative effect of this accounting change on beginning retained earnings isa. ₱180,000 c. ₱96,000b. ₱160,000 d. ₱02. The amount that Ventura should report for depreciation expense on its 2021 income statement isa. ₱160,000 c. ₱100,000b. ₱140,000 d. ₱120,000Renata Corporation purchased equipment in 2020 for $275,200 and has taken $123,840 of regular MACRS depreciation. Renata Corporation sells the equipment in 2022 for $165,120. What is the amount and character of Renata's gain or loss? Renata Corporation has a gain of $ § 1245 recapture X of which $ X is treated as ordinary income due to
- 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'?At the beginning of 2021, Pharoah Co. purchased an asset for $1400000 with an estimated useful life of 5 years and an estimated salvage value of $142000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pharoah Co's tax rate is 20% for 2021 and all future years. At the end of 2021, which of the following deferred tax accounts and balances is reported on Pharoah's balance sheet? Account Deferred tax liability Deferred tax liability Deferred tax asset Balance $61680 $50320 $61680A long-term asset was purchased at the beginning of 2021. It has a 2-year life and no salvage value. The company uses straight-line method for financial purpose and accelerated depreciation method for tax purpose. For tax purpose, 2021’s depreciation is $480 and 2022’s depreciation is $270. Please compute straight-line depreciation for financial purpose on your own. It should be ($480 + $270) and divided by 2. Assuming taxable income for 2021 is $477,000, the enacted tax rate is 20% for all years, this is the only difference between pretax financial income and taxable income, and there were no deferred taxes at the beginning of 2021. What amount of income tax expense should the company report at the end of 2021?
- Clay LLC placed in service machinery and equipment (seven-year property) with a basis of $3,370,000 on June 6, 2022. Assume that Clay has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (ignoring any possible bonus depreciation). (Use MACRS Table 1.) Note: Round final answer to the nearest whole number. Multiple Choice $1,080,000 $481,573 $422,984 $832,984 None of the choices are correct.AMP Corporation (calendar-year-end) has 2020 taxable income of $1,900,000 for purposes of computing the §179 expense. During 2020, AMP acquired the following assets: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Placed in Asset Service Basis Machinery September 12 $ 1,360,000 Computer equipment February 10 400,000 Office building April 2 515,000 Total $ 2,275,000 a. What is the maximum amount of §179 expense AMP may deduct for 2020? b. What is the maximum total depreciation, including §179 expense, that AMP may deduct in 2020 on the assets it placed in service in 2020, assuming no bonus depreciation? (Round your intermediate calculations and final answer to the nearest whole dollar amount.)At the beginning of 2019, PT XYZ purchased an asset for Rp600.000 with an estimated useful life of 5 years and an estimated residual value of Rp50.000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. ABC’s tax rate is 40% for 2019 and all future years. At the end of 2019, which of the following deferred tax accounts and balances is reported on ABC’s statement of financial position?
- AMP Corporation (calendar - year - end) has 2023 taxable income of $1,900,000 for purposes of computing the §179 expense. During 2023, AMP acquired the following assets: (Use MACRS Table 1, Table 2, Table 3, Table 4, and Table 5.) Asset Placed in Service Basis Machinery September 12 $ 1,440,000 Computer equipment February 10 440,000 Office building April 2 555,000 Total $ 2,435,000 a. What is the maximum amount of $179 expense AMP may deduct for 2023? b. What is the maximum total depreciation, including §179 expense, that AMP may deduct in 2023 on the assets it placed in service in 2023, assuming no bonus depreciation?Harris Co. takes a full year's depreciation expense in the year of an asset's acquisition and no depreciation expense in the year of disposition. Data relating to one of Harris's depreciable assets at December 31, 2021 are as follows: Acquisition year 2019 Cost $280,000 Residual value 40,000 Accumulated depreciation 192,000 Estimated useful life 5 years Using the same depreciation method as used in 2019, 2020, and 2021, how much depreciation expense should Harris record in 2022 for this asset? (You need to use the info given to determine which depreciation method is used and then calculate depreciation for 2022.)Information concerning Adnan Corporation’s intangible assets is as follows. (a) On January 1, 2019, Adnan signed an agreement to operate as a franchisee of Hamed Copy Service, Inc. for an initial franchise fee of R$95,000. Of this amount, R$19,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of R$19,000 each, beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2019, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is R$55,350. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Adnan estimates the useful life of the franchise to be 10 years. (b) Adnan incurred R$85,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2019. Legal fees and other costs associated with…