56. On January 1, 2018, Schmidt Industries purchased a new paint sprayer for $400,000. The salvage value after 5 years is estimated to be $100,000. The sprayer is depreciated by straight line depreciation for 5 years. On December 31, 2020, the sprayer is sold for $200,000. Which of the following is correct regarding the disposal of the sprayer? It results in a taxable gain of $100,000. It results in a taxable gain of $20,000. It results in a tax loss of $20,000. It results in a tax loss of $100,000.
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- In March 2019, Helen Carlon acquired used equipment for her business at a cost of 300,000. The equipment is five-year property for regular tax depreciation purposes. a. If Helen depreciates the equipment using the method that will produce the greatest deduction for 2019 for regular income tax purposes, what is the amount of the AMT adjustment? b. Draft a letter to Helen regarding the choice of depreciation methods. Helens address is 500 Monticello Avenue, Glendale, AZ 85306.In 2019, Mary sells for $24,000 a machine used in her business. The machine was purchased on May 1,2017, at a cost of $22,000. Mary has deducted depreciation on the machine of $6,000. What is the amount and nature of Mary's gain as a result of the sale of the machine? $2,000 Section 1231 gain $8,000 ordinary income under Section 1245 $6,000 ordinary income and $2,000 Section 1231 gain $6,000 Section 1231 gain and $2,000 ordinary income under Section 1245 None of the above31. On January 1, 2019, Jacob Inc. purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000. On December 31, 2021, Jacob Inc. sold the truck for $30,000. What amount of gain or loss should Jacob Inc. record on December 31, 2021? A. B. C. D. Gain, $22,000. Loss, $18,000. Gain, $5,000. Loss, $3,000.
- Wildhorse Corporation purchased an asset at a cost of $60,000 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $4,800. For tax purposes, the MACRS class life is 5 years. MACRS Depreciation Rates by Class of Property RecoveryYear 3-year (200% DB) 5-year(200% DB) 7-year(200% DB) 10-year(200% DB) 15-year(150% DB) 20-year(150% DB) 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.29 18.00 9.50 7.219 3 14.81* 19.20 17.49 14.40 8.55 6.677 4 7.41 11.52* 12.49 11.52 7.70 6.177 5 11.52 8.93* 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 7 8.93 6.55* 5.90* 4.888 8…Futabatei Enterprises purchased a delivery truck on January 1, 2020, at a cost of $27,000. The truck has a useful life of 7 years with an estimated salvage value of $6,000. The straight-line method is used for book purposes. For tax purposes, the truck, having an MACRS class life of 7 years, is classified as 5-year property; the optional MACRS tax rate tables are used to compute depreciation. In addition, assume that for 2020 and 2021 the company has revenues of $200,000 and operating expenses (excluding depreciation) of $130,000. Instructions a. Prepare income statements for 2020 and 2021. (The final amount reported on the income statement should be income before income taxes.) b. Compute taxable income for 2020 and 2021. c. Determine the total depreciation to be taken over the useful life of the delivery truck for both book and tax purposes. d. Explain why depreciation for book and tax purposes will generally be different over the useful life of a depreciable asset.Novak Corporation purchased an asset at a cost of $68,750 on March 1, 2020. The asset has a useful life of 8 years and a salvage value of $5,500. For tax purposes, the MACRS class life is 5 years. MACRS Depreciation Rates by Class of Property RecoveryYear 3-year (200% DB) 5-year(200% DB) 7-year(200% DB) 10-year(200% DB) 15-year(150% DB) 20-year(150% DB) 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.29 18.00 9.50 7.219 3 14.81* 19.20 17.49 14.40 8.55 6.677 4 7.41 11.52* 12.49 11.52 7.70 6.177 5 11.52 8.93* 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 7 8.93 6.55* 5.90* 4.888 8…
- 17. The Jessica Company purchased a drilling machine on October 1, 2018 at a cost of P250,000 and depreciated it at 25% per annum on a straight-line basis. On October 1, 2020, P50,000 was spent on an upgrade to the machine in order to improve its efficiency and increase the inflow of economic benefits over the machine’s remaining life. How much depreciation expense should be recognized in profit or loss for the year ended September 30, 2021?On January 1, 2020, Bonita Industries purchased a machine costing $358000. The machine is in the MACRS 5-year recovery class for tax purposes and has an estimated $67000 salvage value at the end of its economic life. It's based on half year convention. Assuming the company uses the general MACRS approach, the amount of MACRS deduction for tax purposes for the year 2020 is MACRS Depreciation Rates by Class of Property 3-year (200% DB) 7-year (200% DB) 15-year (150% DB) 20-year (150% DB) Recovery 5-year (200% DB) 10-year (200% DB) Year 1 33.33 20.00 14.29 10.00 5.00 3.750 2. 44.45 32.00 24.49 18.00 9.50 7.219 14.81* 19.20 17.49 14.40 8.55 6.677 11.52* 11.52 12.49 8.93* 4......... 7.41 11.52 7.70 6.177 5 9.22 6.93 5.713 6.... 5.76 8.92 7.37 6.23 5.285 8.93 6.55* 5.90* 4.888 8. 4.46 6.55 5.90 4.522 6.56 5.91 4.462 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 18 4.461 19 4.462 20 4.461 21 2.231 *switchover to…4. On August 31, 2019, CAMELLIA Company purchased a new machinery for ₱540,000. The machinery has an estimated useful life of 5 years and depreciation is computed using the SYD method. Estimated salvage value of the machine is ₱60,000. If CAMELLIA decides to change its depreciation method to straight-line at the start of 2021, what is the depreciation expense for the year ended December 31, 2021? *
- 5.The Jones Corp. purchased an investment property on Jan 1, 2017 for a cost of P220,000. The property had a useful life of 40 years and at Dec 31, 2020 had a fair value of P300,000. On Dec 31, 2021 the property was sold for P290,000 incurring disposal costs of P10,000. Jones uses the cost model to account for investment properties. What is the gain or loss to be recognized in profit or loss for the year ended Dec 31, 2021 regarding the disposal of the property?ABC Inc. purchased a machine on January 1, 2014 for 900,000. This asset will be depreciated for 10 years. The ABC Inc. purchased a replacement part for 180,000 on January 1, 2020. Assuming the replace part’s cost cannot be determined how much is the loss on replacement to be recognized for 2020?A Company purchased a piece of machinery for $60,000 on January 1, 2019 and has been depreciating the machine using the double-declining-balance method based on a five-year estimated useful life and $10,000 salvage value. On January 1, 2021, A Company decided to switch to the straight-line method of depreciation. The salvage value is still $10,000 and the estimated useful life did not change. Ignore income taxes. Required: (show the computing process and precise journal entries) (1) Prepare the appropriate journal entry, if any, to record the accounting change. (2) Prepare the journal entry to record depreciation for 2021.