6 Kingsman Inc. is developing a new process that it plans to sell. During 2019 and 2020, the company capitalized $1.1 million and $0.2 million respectively. An additional $0.3 million was spent in 2021. During 2021, it became apparent that, due to a lack of financial resources, the company would not be able to complete the project. The total amount of capitalized costs relating to this project at the end of 2021 is Select one: a. $1.6 million b. $1.0 million c. nil d. $1.3 million

6 Kingsman Inc. is developing a new process that it plans to sell. During 2019 and 2020, the company capitalized $1.1 million and $0.2 million respectively. An additional $0.3 million was spent in 2021. During 2021, it became apparent that, due to a lack of financial resources, the company would not be able to complete the project. The total amount of capitalized costs relating to this project at the end of 2021 is Select one: a. $1.6 million b. $1.0 million c. nil d. $1.3 million

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 66P: At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been...

See similar textbooks

Similar questions

Irwin, Incorporated constructed a machine at a total cost of $35 million. Construction was completed at the end of 2020 and the machine was placed in service at the beginning of 2021. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At the beginning of 2024, Irwin decided to change to the straight-line method. Ignoring income taxes, prepare the journal entry relating to the machine for 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).
Orange Corporation constructed a machine at a total cost of $62 million. Construction was completed at the end of 2020 and the machine was placed in service at the beginning of 2021. The machine was being depreciated over a 7-year life using the sum-of-the-years'-digits method. The residual value is expected to be $2 million. At the beginning of 2024, Orange decided to change to the straight-line method. Ignoring income taxes, what will be Orange's depreciation expense for 2024?
Irwin, Inc. constructed a machine at a total cost of $35 million. Construction was completed at the end of 2017 and the machine was placed in service at the beginning of 2018. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At the beginning of 2021, Irwin decided to change to the straight-line method. Ignoring income taxes, what journal entry(s) should Irwin record relating to the machine for 2021?
Irwin, Inc. constructed a machine at a total cost of $79 million. Construction was completed at the end of 2017 and the machine was placed in service at the beginning of 2018. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At the beginning of 2021, Irwin decided to change to the straight-line method. Ignoring income taxes, prepare the journal entry relating to the machine for 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
Dengar
Early in January 2019, Tellco Inc. acquired a new machine and incurred $11,000 of interest, installation, and overhead costs that should have been capitalized but were expensed. The company earned net operating income of $89,000 on average total assets of $782,000 for 2019. Assume that the total cost of the new machine will be depreciated over 10 years using the straight-line method. Required: a. Calculate the ROI for Tellco for 2019. b. Calculate the ROI for Tellco for 2019, assuming that the $11,000 had been capitalized and depreciated over 10 years using the straight-line method. (Hint: There is an effect on net operating income and average assets.) c. Given your answers to parts a and b. why would the company want to account for this expenditure as an expense? d. Assuming that the $11,000 is capitalized, what will be the effect on ROI for 2020 and subsequent years, compared to expensing the interest, installation, and overhead costs in 2019? Complete this question by entering your…
Irwin, Inc. constructed a machine at a total cost of $39 million. Construction was completed at the end of 2017 and the machine was placed in service at the beginning of 2018. The machine was being depreciated over a 10-year life using the straight-line method. The residual value is expected to be $3 million. At the beginning of 2021, Irwin decided to change to the sum-of-the-years’-digits method. Ignoring income taxes, prepare the journal entry relating to the machine for 2021.
Sandstorm Corporation decides to develop a new line of paints. The project begins in 2023. Sandstorm incurs the following expenses in 2023 in connection with the project: Salaries $170,000 Materials 51,000 Depreciation on equipment 25,500 The benefits from the project were realized starting in July 2024. If an amount is zero, enter "0". What are Sand-storm’s related deductions in 2023 and 2024 in connection with the project?
The previous question I asked was answered incorrectly or maybe it was just incomplete?? The answer should be "Recognized $10.98 million loss on the project in 2022." I can't seem to get to that answer.
On September 30, 2021, Xtend Company decided to dispose its manufacturing plant located in Taguig City. The plant is carried at a cost of P8,000,000 with accumulated depreciation of P3,200,000 at December 31, 2020. Annual depreciation on the plant since it was acquired was consistently provided at 8% per year based on cost. The company has not yet recorded depreciation for 2021. The company undertook all the necessary actions to be able to classify the asset as held for sale. On September 30, 2021, Xtend Company estimated that it could sell the plant at its fair value of P4,900,000 after incurring estimated selling costs of P400,000. On December 20, 2021, Xtend Company sold the plant for P4,950,000 and paid disposal costs of P350,000. How much is the gain on sale of Taguig City plant?
Hardev
In 2021, Edwards Corporation incurred research and development costs as follows: Materials and equipment P105,000 Personnel 120,000 Indirect costs 150,000 P375,000 These costs relate to a product that will be marketed in 2022. It is estimated that these costs will be recouped by December 31, 2023, but its process has not achieved economic viability. The equipment has no alternative future use. What is the amount of research and development costs that should be expensed in 2021? a. PO. b. P225,000. c. P270,000. d. P375,000.