During the current year, a business sells equipment for $440,000. The equipment cost $290,000 when purchased and placed in service two years ago and $85,000 of depreciation deductions were allowed. The results of the sale are ____. OPTIONS: A) ordinary income of $120,000. B) Sec. 1231 gain of $120,000. C) ordinary income of $90,000 and LTCL of $30,000. D) ordinary income of $85,000 and Sec. 1231 gain of $150,000.
Q: Assume the packaging Division has no excess capacity and could sell everything it
A: Concept of Variable Cost:Variable cost refers to the cost that changes with the level of production…
Q: What is the total amount of assets?
A: Step 1: Definition of Total AssetsTotal assets represent the total resources owned by a company,…
Q: A balance sheet shows cash, $75,000; marketable securities, $110,000; receivables, $90,000; and…
A: Step 1: Definition of Current RatioThe current ratio is a financial metric used to evaluate a…
Q: Calculate the markup percentage using variable cost pricing?
A: Step 1: Definition of Markup Percentage Using Variable-Cost PricingMarkup percentage under…
Q: What does the selling price per unit need to be?
A: Step 1: Definitions Concept of Contribution Margin:Contribution Margin is the percentage of each…
Q: Can you guide me through solving this financial accounting problem using proper techniques?
A: Step 1: Define Piecework EarningsPiecework earnings refer to wages earned based on the number of…
Q: Dylan Manufacturing had an estimated 90,000 direct labor hours, $360,000 manufacturing overhead, and…
A: Explanation of Predetermined Overhead Rate: The predetermined overhead rate is a calculated cost…
Q: What is A&B?
A: Step 1: Definitions Concept of Variable Costs:Variable Costs are expenses that change directly with…
Q: General accounting question
A: Step 1: Definition of Excess of Purchase Price Over Book ValueThe excess of purchase price over book…
Q: Solve this general accounting problem
A: Explanation of Net Income: Net income represents the total earnings or profit of a company after…
Q: Rivertown Media has reported a total asset turnover of 2.8 times and an ROA of 15% and ROE of 22%.…
A: Concept of Return on Assets (ROA):Return on Assets (ROA) is a financial ratio that shows how…
Q: I need guidance with this general accounting problem using the right accounting principles.
A: Step 1: Definition of Liquidating Distribution (Tax Consequences)In a corporate liquidation, when a…
Q: SUBJECT FINANCIAL ACCOUNTING
A: Explanation of Preferred Stock: Preferred stock is a class of ownership in a corporation that has a…
Q: Provide the answer
A: Step 1: Definitions Concept of Assets:Assets are resources owned by a business that have economic…
Q: General accounting question
A: Step 1: Define Conversion CostsConversion costs include all costs associated with converting raw…
Q: The financial statements of Sunland Manufacturing Company report net sales of $1277500 and accounts…
A: Concept of Average Accounts Receivable:Average accounts receivable is the mean value of a company's…
Q: 4 POINT
A: To determine the predetermined overhead rate based on units produced, we use the…
Q: Please help me
A: Concept of Cost:Cost refers to the original amount paid to acquire or produce an inventory item,…
Q: Don't want AI answer
A: To find the profit margin for 2023, Lets use this formula: ACCORDING TO GIVEN DATA,Net Income (2023)…
Q: Viggo Manufacturing estimates that overhead costs for the next year will be $2,800,000 for indirect…
A: Explanation of Overhead Costs: Overhead costs are indirect expenses that cannot be directly traced…
Q: Please explain the solution to this financial accounting problem using the correct financial…
A: Step 1: Definition of Price-Earnings (P/E) RatioThe Price-Earnings (P/E) ratio measures a company's…
Q: XYZ Corporation reports the following amounts for the fiscal year: Account Amount Assets $9,800…
A: Step 1: Definition of Net IncomeNet income is the amount by which a company's revenues exceed its…
Q: Kindly help me with this General accounting questions not use chart gpt please fast given solution
A: To determine the amount at which the company should record the new delivery truck, we need to…
Q: Subject: financial accounting
A: Explanation of Stock Price: Stock price represents the current market value of one share of a…
Q: Mango Pest Control Ltd. has sales of $720,000, costs of $498,000, depreciation expense of $61,000,…
A: Step 1: Definitions Concept of Net Income:Net Income is the final profit of a company after all…
Q: Newton Company prepared the following sales budget: Month Budgeted Sales July $8,400 August $10,500…
A: Step 1: Definition of Budgeted Ending InventoryBudgeted ending inventory refers to the planned value…
Q: Hy expert please solve this accounting question
A: Step 1: Definition of Profit MarginProfit Margin is a financial metric that shows the percentage of…
Q: Provide answer
A: Explanation of Sales:Sales refer to the total revenue generated from selling goods or services…
Q: HELP
A: ReferencesGarrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial Accounting (16th…
Q: What is net income under absorption costing?
A: Explanation of Variable Costing: Variable costing is an accounting method that only assigns direct…
Q: What would be the depreciation expense?
A: Explanation of Straight-Line Depreciation: Straight-line depreciation is a method of allocating an…
Q: Mason Enterprises reported its highest total cost as $ ninety-two thousandin August. Its lowest…
A: Step 1: DefinitionsConcept of Fixed Cost: Fixed costs are business expenses that remain constant…
Q: What is the dividend amount ?
A: To calculate the dividend amount per share, we can use the formula for dividend yield:Dividend Yield…
Q: expert of general accounting give asap answer
A: Step 1: Definition of Accrual Basis of AccountingAccrual Basis of Accounting is a method of…
Q: How much total overhead cost will be allocated?
A: Explanation of Activity-Based Costing: Activity-Based Costing (ABC) is a costing methodology that…
Q: Help
A: Step 1: Definition of Operating IncomeOperating income (also called operating profit) is the profit…
Q: Clearbrook Inc.'s fixed monthly expenses are $28,000 and its contribution margin ratio is 60%.…
A: Step 1: Introduction to CVP AnalysisCVP analysis, or cost-volume-profit analysis, is a management…
Q: Financial accounting problem
A: Step 1: Definitions Concept of Predetermined Overhead Rate:Predetermined Overhead Rate (POHR) is the…
Q: Accounting answer
A: To determine whether the bond was issued at a premium or a discount, we compare the bond's issue…
Q: what is the bond premium or discount ?
A: The bond issue price of $3,240,000 is less than the face value of $3,600,000. Since the bond was…
Q: I need help
A: Step 1: Definition of Profit MarginProfit margin is a financial metric that shows the percentage of…
Q: The total manufacturing costs added during the period are?
A: Step 1: Definition of Total Manufacturing CostsTotal manufacturing costs include all direct…
Q: Answer this without using chatgtp or AI
A: Concept of Predetermined Overhead Rate:The predetermined overhead rate is a budgeted rate used to…
Q: Westpoint Supplies has net working capital of $4,800, total assets of $29,400, and net fixed assets…
A: Net working capital (NWC) is calculated as: NWC = Current Assets - Current Liabilities You are…
Q: General accounting
A: To estimate the P/E (Price-to-Earnings) multiple with respect to year 6 earnings, follow these…
Q: This is accounting qn.
A: To determine the initial cost of the equipment, we use the Internal Rate of Return (IRR) formula,…
Q: Accounting question
A: Step 1: Define Profit MarginProfit margin is a financial ratio that measures the profitability of a…
Q: Need solution No AI..
A: To calculate the applied overhead, follow these steps:Determine the predetermined overhead rate…
Q: Please give me answer and general accounting question
A: Step 1: Definition of Total EarningsTotal earnings represent the sum of a company's operating…
Q: General accounting
A: Step 1: Definition of Net IncomeNet Income is the total profit of a company after all expenses. It…
During the current year, a business sells equipment for $440,000. The equipment cost $290,000 when purchased and placed in service two years ago and $85,000 of depreciation deductions were allowed. The results of the sale are ____. OPTIONS: A) ordinary income of $120,000. B) Sec. 1231 gain of $120,000. C) ordinary income of $90,000 and LTCL of $30,000. D) ordinary income of $85,000 and Sec. 1231 gain of $150,000.

Step by step
Solved in 2 steps

- 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.Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.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.
- Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?Cox Construction, a company in its 10th year of business, purchased a piece of equipment on April 1, year 9, for 20,000. Cox has used it for business purposes since the initial purchase date. The company depreciated the equipment using the MACRS half-year table for 5-year assets. For tax purposes, what is the amount of accumulated depreciation expense for the equipment as of December 31, year 10? a. 6,000 b. 10,400 c. 11,600 d. 12,800Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.
- On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.Akron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual value is 15,000. Akron estimates that the asset has a service life of 5 years. Calculate the depreciation expense using the sum-of-the-years-digits method for Years 1 and 2 of the assets life.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?
- On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.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.



