Nine months ago you paid $160,000 for a tract of timber that you are using as an investment. At time of purchase the tract contained a total of 450 MBF of sawtimber. An appraisal at the time of purchase indicated the tract was worth $180,000 in total with $151,200 of that value in the sawtimber, $27,000 of that value being the bare land, and the remaining $1,800 being the value of an old business truck also on the site. You just sold a total of 100 MBF of timber from this property, which was harvested as part of a Timber Stand Improvement activity, and received a stumpage price of $320 per MBF sold. If the federal long term capital gains tax rate is 15%, the federal short term capital gains tax rate is 25% and the federal ordinary income tax rate is 28%, what will be the amount of federal tax you now owe on the timber that was just harvested?

Nine months ago you paid $160,000 for a tract of timber that you are using as an investment. At time of purchase the tract contained a total of 450 MBF of sawtimber. An appraisal at the time of purchase indicated the tract was worth $180,000 in total with $151,200 of that value in the sawtimber, $27,000 of that value being the bare land, and the remaining $1,800 being the value of an old business truck also on the site. You just sold a total of 100 MBF of timber from this property, which was harvested as part of a Timber Stand Improvement activity, and received a stumpage price of $320 per MBF sold. If the federal long term capital gains tax rate is 15%, the federal short term capital gains tax rate is 25% and the federal ordinary income tax rate is 28%, what will be the amount of federal tax you now owe on the timber that was just harvested?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Frank acquires a coal mine at a cost of 400,000. Intangible development costs total 100,000. After extraction has occurred, Frank must restore the property (estimated fair value of the obligation is 80,000), after which it can be sold for 160,000. Frank estimates that 4,000 tons of coal can be extracted. If 700 tons are extracted in the first year, prepare the journal entry to record depletion.
Freeport-McMoRan Copper and Gold has purchased a new ore grading unit for $80,000. The unit has an anticipated life of 10 years and a salvage value of $ 10,000. Use the DB and DDB methods to compare the schedule of depreciation and book values for each year. Solve by hand and by spreadsheet.
A company purchased a Wheel Loader 5 years ago with an initial value of $39,500, a salvage value of $18,500, an annual repair and maintenance cost of $5,000, a storage cost of $7500, a fuel cost of $1250 and estimated life of 10 years. Calculate the machine's book value now (today) using the straight-line, sum-of-years digits, and sinking fund depreciation methods. Assume an interest rate of 2%. Also, answer the following question: 1. Will the three methods give the same results? Why? 2. Which method gives higher book value? 3. How is the book value calculation process different from the ownership?
Goodson Healthcare purchased a new sonogram imaging unit for $300,000 and a truck body andchassis for an additional $100,000 to make the unit mobile. The unit-truck system will be depreciatedas one asset. The functional life is 8 years, and the salvage is estimated to be 9% of the purchaseprice of the imaging unit regardless of the number of years of service. Use classical Straight Linedepreciation to determine the salvage value, annual depreciation, and book value after 5 years ofservice.
In January, 2004, Nixon Corporation purchased a mineral mine for P6,800,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of P400,000 after the ore has been extracted. The company incurred P2,000,000 of development costs preparing the mine for production. During 2004, 500,000 tons were removed and 400,000 tons were sold. What is the amount of depletion that Nixon should expense for 2004? P1,280,000 OP2,240,000 P1,680,000 OP1,600,000
Sandhill Ltd. purchased several intangible assets, as follows: Asset Licences Customer lists (a) The following information is also available: Asset Licences Purchase Cost Customer lists Patents Copyrights $80,000 In addition to the costs listed above, there were legal fees of $15,100 associated with the licence acquisitions. The licences are valid in perpetuity, and sales of the products produced under the licences have been strong and are expected to continue at the same level for many decades. The customer lists are expected to be useful for the next six years. The patent has a legal life of 20 years, but technological changes are expected to render it worthless after about 8 years. The copyright is good for another 40 years, but nearly all the related sales are expected to occur during the next 10 years. $ 60,300 Calculate the annual amortization expense, if any, that should be recorded for each of these intangible assets, assuming the straight-line method is appropriate. (Do not…
A tax and duty free importation of a 30 hp sandmill for paint manufacturing cost P 360,000. Bank charges arrastre and brokerage cost P 5,000. Foundation and installation cost were P 25,000. Other incidental expenses amount to P 20,000. Salvage value of the mill is estimated to be 60,000 after 20 years. Find the appraisal value of the mill, using straight-line depreciation at the end of 15 years. 17,500.00 235,000.00 147,500.00 135,000.00 60,000.00 174,500.00
In January, 2021, Melon Corporation purchased a mineral mine for $3,400,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $200,000 after the ore has been extracted. The company incurred $1,000,000 of development costs preparing the mine for production. During 2021, 500,000 tons were removed and 400,000 tons were sold. What is the amount of depletion that Melon should expense for 2021
Machinery was purchased for $400000. Freight charges amounted to $15000 and there was a cost of $34000 for building a foundation and installing the machinery. It is estimated that the machinery will have a $50000 salvage value at the end of its 4-year useful life. Depreciation expense each year using the straight-line method will be $99750. $87750. $112250. Ⓒ$87500.
Shahia Company bought a building for $87,000 cash and the land on which it was located for $123,000 cash. The company paid transfer costs of $15,000 ($6,000 for the building and $9,000 for the land). Renovation costs on the building before it could be used were $32,000. 1. Compute straight-line depreciation at the end of one year, assuming an estimated 10-year useful life and a $18,000 estimated residual value. 2. Determine the net book value of the property (land and building) at the end of year 2. Please follow the format