Would be recorded as a gain on disposable of the machine on January?? On January 1, 2020, Nexus Technologies purchaseda machine for $15,000. The machine was estimatedto have a 10-year useful life and a residual value of$800. Straight-line depreciation is used. On January1, 2022, the machine was exchanged for officeequipment with a fair value of $12,500. Assumingthat the exchange had commercial substance, howmuch would be recorded as a gain on disposal ofthe machine on January 1, 2022?

Calculation of Annual Depreciation using Straight Line Depreciation MethodAnnual Depreciation =…

Answered: On January 1, 2020, Nexus Technologies…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter11: Property Dispositions

Section: Chapter Questions

Problem 64P

See similar textbooks

Similar questions

At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2015 when it should have been treated as a cost of production equipment installation costs. As a result of the misclassification, the depreciation through 2018 was understated by 110,000, and depreciation for 2019 was understated by 90,000. What would be the consequences of correcting for the misclassification of the property cost? a. The taxpayer uses the FIFO inventory method, and 25% of goods produced during the period were included in the ending inventory. b. The taxpayer uses the LIFO inventory method, and no new LIFO layer was added during 2019.
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.
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.
Comprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar Corporation purchased a machine for 50,000. Lapar paid shipping expenses of 500, as well as installation costs of 1,200. The company estimated that the machine would have a useful life of 10 years and a residual value of 3,000. On January 1, 2020, Lapar made additions costing 3,600 to the machine in order to comply with pollution-control ordinances. These additions neither prolonged the life of the machine nor increased the residual value. Required: 1. If Lapar records depreciation expense under the straight-line method, how much is the depreciation expense for 2020? 2. Assume Lapar determines the machine has three significant components as shown below. If Lapar uses IFRS, what is the amount of depreciation expense that would be recorded?
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.
On March 10, 2027, Skysong Company sells equipment that it purchased for $203,520 on August 20, 2020. It was originally estimated that the equipment would have a life of 12 years and a salvage value of $17,808 at the end of that time, and depreciation has been computed on that basis. The company uses the straight-line method of depreciation. (a) Compute the depreciation charge on this equipment for 2020, for 2027, and the total charge for the period from 2021 to 2026, inclusive, under each of the six following assumptions with respect to partial periods. (Round depreciation per day to 2 decimal places, e.g. 15.64 and final answers to O decimal places, e.g. 45,892.) 1. Depreciation is computed for the exact period of time during which the asset is owned. (Use 365 days for base and record depreciation through March 9, 2027.) 2. Depreciation is computed for the full year on the January 1 balance in the asset account. 3. 4. Depreciation for one-half year is charged on plant assets acquired…
The Fisher Company purchased a machine on October 1, 2018, for $18,000. At the time of acquisition, the machine was estimated to have a useful kufe if five years and an estimated salvage of $5,000. Fisher has recorded monthly depreciation using the straigh-line method. On April 1, 2020, the machine was sold for $50,000. What should be the loss recognized from the sale of the machine? a. $0 b. $2,500 c. $5,000 d. $7,500
On January 1, 2019, Allen Corp. purchased equipment for $760,000. At the time, it was estimated that the equipment would have a 20 year useful life, and a salvage value of $80,000 at the end of that time. Allen uses straight line depreciation. On January 1, 2024, Allen sold the equipment for $560,375. What amount of gain or loss was reported on the sale? Enter a gain as a positive number or a loss as a negative number.
On 30 June 2020, James Ltd acquired a machine for $200 500 cash, with an expected useful life of ten years and a zero residual value. The company has adopted fair value for the valuation of non-current assets. On 30 June 2021, the company hired an independent valuer who assessed the value of the machine to be $185 000 with a remaining useful life of 8 years and residual value of $5 000. On 30 June 2022, the fair value of the machine is $150 000 with a remaining useful life of 6 years and zero residual value. The company uses straight-line depreciation method for depreciating all its property, plant and equipment. Income tax rate is 30%. The financial year ends on 30 June. Required Prepare all the necessary journal entries related to the machine from 30 June 2020 to 30 June 2022.
Duck Pond Golf Club purchased equipment on January 1, 2024, for $16,979. Suppose Duck Pond Golf Club sold the equipment for $12,000 on December 31, 2025. Accumulated Depreciation as of December 31, 2025, was $7,546. Journalize the sale of the equipment, assuming straight-line depreciation was used. First, calculate any gain or loss on the disposal of the equipment. Market value of assets received Less: Book value of asset disposed of Cost Less: Accumulated Depreciation Gain or (Loss) Now, journalize the sale of the equipment. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Check your spelling carefully and do not abbreviate.)
King Company purchased a machine on July 1, 2021, for P600,000. The machine has an estimated useful life of five years and a salvage value of P80,000. The machine is being depreciated by the firm from the date of acquisition by the 150% declining balance method. For the year ended December 31, 2022, King should record the depreciation expense on this machine as?
In 2022, Leo construction traded in a light duty pickup truck that had a book value of $18,000. A new pickup truck having a fair market value of $55,236 was acquired. Because the vendor accepted the old truck as a trade-in, a deal was agreed, and Leo construction would only pay $32,405 for the new truck. Compute the third year depreciation (d3) for the new truck using the general depreciation system method.

SEE MORE QUESTIONS

Recommended textbooks for you

CONCEPTS IN FED.TAX., 2020-W/ACCESS

Accounting

ISBN:

9780357110362

Author:

Murphy

Publisher:

CENGAGE L

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

SWFT Individual Income Taxes

Accounting

ISBN:

9780357391365

Author:

YOUNG

Publisher:

Cengage

CONCEPTS IN FED.TAX., 2020-W/ACCESS

Accounting

ISBN:

9780357110362

Author:

Murphy

Publisher:

CENGAGE L

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

SWFT Individual Income Taxes

Accounting

ISBN:

9780357391365

Author:

YOUNG

Publisher:

Cengage

SWFT Comprehensive Vol 2020

Accounting

ISBN:

9780357391723

Author:

Maloney

Publisher:

Cengage

SWFT Comprehensive Volume 2019

Accounting

ISBN:

9780357233306

Author:

Maloney

Publisher:

Cengage

SWFT Essntl Tax Individ/Bus Entities 2020

Accounting

ISBN:

9780357391266

Author:

Nellen

Publisher:

Cengage

SEE MORE TEXTBOOKS