help me to solve this questions Compact Corporation purchased $90,000 of five-year equipment onMarch 10, 2015, and elected to expense $20,000 of the cost underSection 179. Compact sells the equipment on July 30, 2016, for $95,000.Compact properly deducted $25,200 under MACRS depreciation for2015 and 2016. What is the proper classification of the gain?A. Section 1245 ordinary income is $45,200; Section 1231 gain is $5,000.B. Section 1245 ordinary income is $50,200; Section 1231 gain is $0.C. Section 1245 ordinary income is $5,000; Section 1231 gain is $45,200.D. Section 1245 ordinary income is $0; Section 1231 gain is $50,200.

Step 1: Definition of Section 1245 and Section 1231 GainsSection 1245 Ordinary Income: This applies…

Answered: Compact Corporation purchased $90,000…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter14: Property Transactions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 32CE

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At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?
Turnip Company purchased an asset at a cost of 10,000 with a 10-year life during the current year. Turnip uses differing depreciation methods for financial reporting and income tax purposes. The depreciation expense during the current year for financial reporting is 1,000 and for income tax purposes is 2,000. Turnip is subject to a 30% enacted future tax rate. Prepare a schedule to compute Turnips (a) ending future taxable amount, (b) ending deferred tax liability, and (c) change in deferred tax liability (deferred tax expense) for the current year.
On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received $12,000,000 in net assets. In 2016, the market value of the goodwill obtained from Branta Corp. was valued at $4,000,000, but in 2017 it dropped to $2,000,000. Prepare the journal entry for the creation of goodwill and the entry to record any impairments to it in subsequent years.
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Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
What is the proper classification of the gain ?
Magnus Corporation purchased $90,000 of five-year equipment on March 10, 2019 and elected to expense $20,000 of the cost under Section 179. Compact sells the equipment on July 30, 2021, for $95,000. Compact deducted $25,200 under MACRS depreciation. What is the proper classification of the gain? Group of answer choices Section 1245 ordinary income is $50,200; Section 1231 gain is $0 Section 1245 ordinary income is $0; Section 1231 gain is $50,200 Section 1245 ordinary income is $5,000; Section 1231 gain is $45,200 Section 1245 ordinary income is $45,200; Section 1231 gain is $5,000
Renata 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
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Renata Corporation purchased equipment in 2019 for $180,000 and has taken $83,000 of regular MACRS depreciation. Renata Corporation sells the equipment in 2021 for $110,000. What is the amount and character of Renata's gain or loss? Renata Corporation has a gain of $ of which $ is treated as ordinary income due to
Renata Corporation purchased equipment in 2019 for $366,400 and has taken $164,880 of regular MACRS depreciation. Renata Corporation sells the equipment in 2021 for $219,840. What is the amount and character of Renata's gain or loss? Renata Corporation has a gain of $fill in the blank 1 of which $fill in the blank 2 is treated as ordinary income due to section 1245 recapture. .

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