Ivy company purchased land and a building on January 1, 2022. Management’s best estimate of the value of the land was $100000 and of the building $250000. However, management told the accounting department to record the land at 230000 and the building at $120000. The building is being depreciated on a straight-line basis over 20 years with no salvage value. Why do you suppose management requested this accounting treatment? Is it ethical?

Ivy company purchased land and a building on January 1, 2022. Management’s best estimate of the value of the land was $100000 and of the building $250000. However, management told the accounting department to record the land at 230000 and the building at $120000. The building is being depreciated on a straight-line basis over 20 years with no salvage value. Why do you suppose management requested this accounting treatment? Is it ethical?

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter8: Depreciation And Sale Of Business Property

Section: Chapter Questions

Problem 6MCQ: Which of the following is not true about the MACRS depreciation system: A salvage value must be...

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