e and explain the adjustment to taxable income that Ross must make due to the change in accounting method. When must Ross include this adjustment in its income?
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Ross Company is a C corporation providing property management services. Ross has used the cash method since inception because its gross receipts did not exceed $26,000,000. This year its average annual gross receipts for the prior three years crossed the $26,000,000 mark, requiring Ross to change from the cash method to the accrual method. At the end of its prior year, Ross had
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Compute and explain the adjustment to taxable income that Ross must make due to the change in accounting method.
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When must Ross include this adjustment in its income?
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- This year, Sigma Inc. generated $636,000 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months: Initial Basis Acc. Depr.* Sale Price Marketable securities $ 157,600 $0 $ 74,000 Production equipment 115,600 92,480 36,000 Business realty: Land 235,500 0 241,750 Building 263,000 78,900 218,000 *Through date of sale. Required: Compute Sigma's taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured Section 1231 losses. Recompute taxable income assuming that Sigma sold the securities for $174,000 rather than $74,000. Note: I have part B correct with $705,430. It's part A I am having trouble withDillard Company starts the year with $10,000 in its cash account, $10,000 in its equipment account, $3,000 in accumulated depreciation and $17,000 in its retained earnings account. During the year Dillard sells the equipment for $6530. After the sale of equipment is recorded, the retained earnings account will have a balance of $________.Lone Star Company is a calendar-year corporation, and this year Lone Star reported $122,000 in current E&P that accrued evenly throughout the year. At the beginning of the year, Lone Star’s accumulated E&P was $14,640. At the beginning of the year, Lone Star’s sole shareholder was Matt McCon. Lone Star declared $36,600 in cash distributions on each of the following dates: March 31, June 30, September 30, and December 31. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) b. Suppose that Matt sold half of his shares to Chris Coop on June 1st for $51,000. How much dividend income will Matt recognize this year? Dividend recognized: c. If Matt’s basis in his Lone Star shares was $8,100 at the beginning of the year, how much capital gain will he recognize on the sale and distributions from Lone Star? Capital gain recognized on the sale and distribution:
- Vaughn Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,968,000 on March 1, $1,248,000 on June 1, and $3,076,020 on December 31. Vaughn Company borrowed $1,145,430 on March 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2,433,900 note payable and an 10%, 4-year, $3,482,600 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.) Weighted-average interest rate %Bensen Company started business by acquiring $26,900 cash from the issue of common stock on January 1, Year 1. The cash acquired was immediately used to purchase equipment for $26,900 that had a $4,500 salvage value and an expected useful life of four years. The equipment was used to produce the following revenue stream (assume that all revenue transactions are for cash). At the beginning of the fifth year, the equipment was sold for $4,950 cash. Bensen uses straight-line depreciation. Revenue Year 1 $ 7,820 Year 2 $ 8,320 Year 3 $ 8,520 Year 4 $ 7,320 Year 5 $ 0 Required Prepare income statements, statements of changes in stockholders' equity, balance sheets, and statements of cash flows for each of the five years. Complete this question by entering your answers in the tabs below. Statement of Income Statement Statement of Changes in Balance Sheet Stockholders Cash Flows Prepare the statements of cash flows for each of the five years. Note: Amounts to be deducted and cash outflows…Hilton earned $80,000 each year from the booking activities (main operation) and $30,000 from the laundry section. The total recognized operational expenses for the taxation purposes were $50,000. The company provided you with all the necessary documents to prepare the taxation report for them. After analyzing the documents, you found the following: A. S10,000 of the expenses occurred and were paid last year. B. $5,000 of the earned revenues from the booking activities related to canceled and refunded revenues to the customers. If the taxation law has the following instruction for preparing the taxation reports. I. First S15,000 of the total revenue will be free entitled of 5% discount from the tax. II. The company will receive an allowance because of their environmental activities of $7,000 from the total taxable income. III. The company will receive a 10% allowance from the total revenue after deducting the operational expenses. Instruction: 1. Determine whether the case is tax…
- Jada Company had the following transactions during the year: Purchased a machine for $440,000 using a long-term note to finance it. Paid $460 for ordinary repair. Purchased a patent for $48,000 cash. Paid $160,000 cash for addition to an existing building. Paid $52,000 for monthly salaries. Paid $240 for routine maintenance on equipment. Paid $10,000 for major repairs. Depreciation expense recorded for the year is $20,000. A) If all transactions were recorded properly, what is the amount of increase to the Property, Plant, and Equipment section of Jada’s balance sheet resulting from this year’s transactions? B) What amount did Jada report on the income statement for expenses for the year?On June 1, Cline Co. paid $800,000 cash for all of the issued and outstanding common stock of Renn Corp. The carrying amounts for Renn’s assets and liabilities on June 1 follow:On June 1, Renn’s accounts receivable had a fair value of $140,000. Additionally, Renn’s in-process research and development was estimated to have a fair value of $200,000. All other items were stated at their fair values. On Cline’s June 1 consolidated balance sheet, how much is reported for goodwill? a. $320,000b. $120,000c. $80,000d. $20,000In the current year, Company A made the following cash purchases: 1. The exclusive right to manufacture and sell equipment from Company B for $203,000. Company B created the unique design for the equipment. Company A also paid an additional $11,500 in legal and filing fees to attorneys to complete the transaction. 2. An initial fee of $260,000 for a three-year agreement with Company C to use its name for a new facility in the local area. Company C has locations throughout the country. Company A is required to pay an additional fee of $5,300 for each month it operates under the Company C name, with payments beginning in March of the current year. Company A also purchased $403,000 of equipment to be placed in the new facility. 3. The exclusive right to sell a book, for $22,000. Required: Prepare a summary journal entry to record expenditures related to initial acquisitions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account…
- Mainline Clinic, a for-profit business, had revenues of $11.1 million last year. Expenses other than depreciation totaled 67 percent of revenues, and depreciation expense was $1.3 million. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash. Mainline must pay taxes at a rate of 39 percent of pretax (operating) income. Now, suppose the company changed its depreciation calculation procedures (still within GAAP) such that its depreciation expense doubled. How would this change affect Mainline’s net income? If net income would go down, enter the amount of the change as a negative number. If net income would go up, enter the amount of the change as a positive number.During a company's first year of operation, the following occurs: A company is started via the owners investing SEK 800,000 of their own money in the company. Then he goes to the bank and borrows SEK 800,000 (amortization over 2 years starting in December year 1). During the first year, the company has revenues of SEK 3,200 thousand (all paid in cash) and current payments forpurchased products of SEK 2,750,000 (all paid in cash). At the end of the year, there are goods in stock of SEK 250,000. The company also makes a cash-paid investment during the year of SEK 900,000 during the year (depreciation period 3 years). Enter the amounts after closing financial statements, year 1, for the following items a. Closing balance for cash ...... SEK thousandb. Total assets ...... SEK thousandc. Results of the financial year .....Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. 1. The equipment was purchased on account for $30,000. Credit terms were 3/10, 1/30. Payment was made within the discount period and the company records the purchases of equipment net of discounts. 2. Connors gave the seller a noninterest-bearing note. The note required payment of $32,000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 12% properly reflects the time value of money in this situation. 3. Connors traded in old equipment that had a book value of $8,500 (original cost of $19,000 and accumulated depreciation of $10,500) and paid cash of $27,000. The old equipment had a fair value of $4,500 on the date of the exchange. The exchange has commercial substance. 4. Connors issued 1,500 shares of its no-par common stock in exchange for the equipment. The market…
