Doug Smith Industries purchased warehouses for $121 million (no residual value) at the beginning of 2021. The warehouses were being deyear life using the sum-of-the-years'-digits method. At the beginning of 2024, management decided to change to straight-line. Ignoring taxentry will include a debit to depreciation expense of:Note: Round your answer to 2 decimal places.3:20Multiple Choice$12.10 million.$8.80 million.$61.60 million.$59.40 million.

To solve this problem, we need to calculate the depreciation expense for the warehouses using the…

Answered: Doug Smith Industries purchased…

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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At December 31, 2023, Halifax Servicing's balance sheet showed capital asset information as detailed in the schedule below. Halifax calculates depreciation to the nearest whole month. 1 There have been no disposals or betterments since the date of purchase. 2 Actual kilometres driven were: 2023, 14,000; 2024, 68,000. Required: Complete the schedule. (Do not round intermediate calculations. Round the final answers to the nearest whole dollars.) Description Office Equip. Machinery Truck Date of Purchase March 27/20 June 4/20 Nov. 13/23 Cost information Depreciation Method Straight-line Double-declining- balance Units-of-production Cost1 $ 84,000 $ 14,000 315,000 Residual 174,000 34,000 28,000 Life 10 yr. 6 yr. 400,000 sq. km2 Balance of Accum. Deprec. Dec. 31, 2023 40,000 X 239,706 5,110 Depreciation Depreciation Expense for 2024 7,000 25,073 24,820 Balance of Accmu. Deprec. Dec. 31, 2024 33,250 264,799 29,930
Janus Corporation purchased major pieces of manufacturing equipment on January 1, 2020 for a total of $42 million. Janus uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2022, the book value of the equipment was $36 million and its tax basis was $26 million. At December 31, 2023, the book value of the equipment was $34 million and its tax basis was $19 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2023 was $50 million.Required:1. Prepare the appropriate journal entry to record Janus’s 2023 income taxes. Assume an income tax rate of 25%.2. What is Janus’s 2023 after-tax net income?
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On January 1, 2019, Nobel Corporation acquired machinery at a cost of $1,600,000. Nobel adopted the straight-line method of depreciation for this machine and had been recording depreciation over an estimated life of ten years, with no residual value. At the beginning of 2022, a decision was made to change to the double-declining balance method of depreciation for this machine.Assuming a 20% tax rate, the cumulative effect of this accounting change on beginning retained earnings, is a. $300,800. b. $0. c. $240,640. d. $179,200.
A firm purchased $62,800 of fixed assets two years ago. The company no longer needs these assets so it is going to sell them today for $28,500. The assets are classified as five-year property for MACRS. The MACRS rates are .2, .32, .192, .1152, .1152, .0576, for Years 1 to 6, respectively. What is the net cash flow from this sale if the firm's tax rate is 23 percent and no bonus depreciation is taken? $29,281.04 $26,576.00 $28.878.12 $27,516.60 O $29,648.12
On June 5, 2023, Mabel Company purchased an oil well for $970,000. The well contains an estimated 87,000 barrels of oil, with an estimated residual value of zero. During July 2023, 21,000 barrels of oil were removed from the well and 17,000 barrels were sold later. What is the cost of oil sold for July? (Round intermediary calculations to the nearest cent and the final answer to the nearest dollar). A. $234,150. B. $87,000. C. $189,550. D. $970,000.
In 2025, the controller of Green Company discovered that 2024 depreciation expense was overstated by $40,000, a material amount. Assuming an income tax rate of 25%, the prior period adjustment to 2025 beginning retained would be:
Hadley Zavis Inc. started its unicycle manufacturing business in 2020 and acquired $600,000 of equipment at the beginning of 2020. It decided to use the double-declining balance (DDB) depreciation on its equipment with no residual value and a 10-year useful life. In 2022 it changed to the straight-line depreciation method. Depreciation computed for 2020-2021 is presented below: Year DDB 2020 $120,000 2021 96,000 In 2022, what would Harley Davis report for depreciation expense?
For financial reporting, Kumas Poultry Farms has used the declining-balance method of depreciation for conveyor equipment acquired at the beginning of 2021 for $2,832,000. Its useful life was estimated to be six years with a $228,000 residual value. At the beginning of 2024, Kumas decides to change to the straight-line method. The effect of this change on depreciation for each year is as follows: Year ($ in thousands) Straight-Line Declining Balance Difference 2021 $ 434 $ 944 $ 510 2022 434 629 195 2023 434 420 (14) $ 1,302 $ 1,993 $ 691 Required: 2. Prepare any 2024 journal entry related to the change. Note: Enter you answers rounded to the nearest dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Thor, Inc reported depreciation on the income statement by the straight-line method on an asset with a four-year useful life. MACRS is used for the tax return. Income statement: $5 million each year. Tax Return: 2020 $7 million; 2021 $6 million; 2022 $4 million; 2023 $3 million. The income tax rate is 20% for all years. The current year is 2022. Which of the following statements is true regarding the differences between accounting and tax depreciation? The 2022 beginning balance in the deferred tax liability is $.6M, the 2022 difference is originating, and the desired ending balance in the 2022 deferred tax liability is $.4M. The 2022 beginning balance in the deferred tax liability is $.6M, the 2022 difference is reversing, and the desired ending balance in the 2022 deferred tax liability is $.4M. The 2022 beginning balance in the deferred tax liability is $.4M, the 2022 difference is reversing, and the desired ending balance in the 2022 deferred tax liability is $.6M. The 2022…
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