Dee began leasing a business auto on January 1, 2022. The lease terminates on April 30, 2024. The fair marketvalue of the car is $66,500. Dee uses the auto 75% for business. The 2022 lease-income inclusion table indicatesan inclusion amount of $14 for a vehicle with a FMV of $66,500.How much is the 2022 lease income inclusion that Dee must report on her Schedule C?O A. $0OB. $14O C. $11OD. $132

The part of a leased asset's fair market value that is included in a taxpayer's income for tax…

Answered: Dee began leasing a business auto on…

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, 2020, Mr. Ray Holland leases an automobile to be used 100 percent of the time in his unincorporated business. The lease cost is $940 per month. The manufacturer's suggested list price for the automobile is $101000. Mr. Holland makes no down payment and no refundable deposits. Determine his maximum deduction for lease payments for 2020. Ignore GST and PST considerations.
Ex.13.
On December 1, 2020, Carlos entered into a lease on a building for use in his business for $1,500 per month. Under the lease terms, Carlos pays 12 months’ rent ($18,000) in advance on December 1. How much can Carlos deduct for rent in 2020? a. $18,000 b. $1,000 c. $13,000 d. $12,000
On January 1, 2020, Indigo Animation sold a truck to Peete Finance for $48,000 and immediately leased it back. The truck was carried on Indigo's books at $43,000. The term of the lease is 5 years, there is no bargain purchase option, and title does not transfer to Indigo at lease-end. The lease requires 5 equal rental payments of $11,707 at the end of each year (first payment on January 1, 2021). The appropriate rate of interest is 7%, the truck has a useful life of 5 years, with no expected residual value at the end of the lease term. Prepare Indigo's 2020 journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to O decimal places, e.g. 5,275. Record journal entries in the order presented in the problem.) Click here to view factor tables. Date Account Titles and Explanation Debit Credit /20 Cash Lease Receivable…
On March 1, 2023, Dak Prescott leases and places in service a passenger automobile. The lease will run for five years and the payments are $500 per month. During 2023, he uses his car 60% for business and 40% for personal activities. Assuming the dollar amount from the IRS table for auto leases is $70, determine Dak's gross income attributable to the lease. The car was in service for 305 out of 365 days. a. $0 b. $35 c. $59 d. $70
On December 1, 2021, Carlos entered into a lease on a building for use in his business for $1,500 per month. Under the lease terms, Carlos pays 12 months' rent ($18,000) in advance on December 1. How much can Carlos deduct for rent in 2021? a.$13,000 b.$18,000 c.$1,000 d.$12,000
Jackson, Inc., an engineering consulting firm, uses the cash method of accounting and is a calendar year taxpayer. Read the requirement. Compute the amount of Jackson's current year deductions for the following transactions: (Enter a "0" if no current year deduction is allowed.) a. On November 1 of the current year, it entered into a lease to rent some office space for five years. The lease agreement states that the lease payments are $14,400 per year, payable in advance each November 1 for the following 12-month period. Under the terms of the lease, Jackson is required to pay a $2,500 deposit, refundable upon the termination of the lease. The deduction amount for transaction a. is
On January 1, 2019, Ballieu Company leases specialty equipment with an economic life of 8 years to Anderson Company. The lease contains the following terms and provisions: • The lease is noncancelable and has a term of 8 years. • The annual rentals are $39,200, payable at the beginning of each year. • The interest rate implicit in the lease is 11%. • Anderson agrees to pay all executory costs directly to a third party and is given an option to buy the equipment for $1 at the end of the lease term, December 31, 2026. • The cost of the equipment to the lessor is $145,500, and the fair value is approximately $223,900. • Ballieu incurs no material initial direct costs. • It is probable that Ballieu will collect the lease payments. • Ballieu estimates that the fair value is expected to be significantly greater than $1 at the end of the lease term. Ballieu calculates that the present value on January 1, 2019, of 8 annual payments in advance of $39,200 discounted at…
Skysong enters into an agreement with Traveler Inc. to lease a car on December 31, 2019. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal or bargain purchase option. The remaining economic life of the car is 3 years, and it is expected to have no residual value at the end of the lease term. 2. The fair value of the car was $14,100 at commencement of the lease. 3. Annual payments are required to be made on December 31 at the end of each year of the lease, beginning December 31, 2020. The first payment is to be of an amount of $5,148.50, with each payment increasing by a constant rate of 5% from the previous payment (i.e., the second payment will be $5,519.36 and the third and final payment will be $5,795.30). 4. Skysong’ incremental borrowing rate is 8%. The rate implicit in the lease is unknown. 5. Skysong uses straight-line depreciation for all similar cars. (a)Prepare Skysong’ journal…
7
Scupper Farms, the lessee, and Tyrrell Equipment, the lessor, sign a lease agreement on January 1, 2019, that provides for Scupper to lease a cultivator from Tyrrell. The lease terms, provisions, and other related events are as follows: The lease is noncancelable and has a term of 6 years. The annual rentals are $55,000 payable at the beginning of each year. Scupper agrees to pay all executory costs directly to a third party, which are expected to be $1,100 annually, including property taxes of $500, insurance of $350, and maintenance of $250. These costs are paid each year on November 1. The cultivator has an estimated economic life of 6 years. Scupper guarantees a residual value of $60,000 at the end of 6 years. Scupper believes it is probable that it will pay $15,000 cash as a result of this guarantee. The interest rate implicit in the lease is 14%, which is known by Scupper. Scupper’s incremental borrowing rate is 15%, and it uses the sum-of-the-years’-digits method to record…
On January 1, 2020, Martinez Animation sold a truck to Peete Finance for $44,000 and immediately leased it back. The truck was carried on Martinez’s books at $40,000. The term of the lease is 3 years, there is no bargain purchase option, and title does not transfer to Martinez at lease-end. The lease requires three equal rental payments of $12,500 at the end of each year (first payment on January 1, 2021). The appropriate rate of interest is 4%, the truck has a useful life of 5 years, and the residual value at the end of the lease term is expected to be $14,000, none of which is guaranteed.Prepare Martinez’s 2020 journal entries. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.)Click here to view factor tables. Date Account…

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