Hello tutor please provide answer general accounting question On March 15, 2018, Crestview Corporation acquired a commercialbuilding (39-year nonresidential real property) for $350,000 for use in itsbusiness. In 2018 and 2019, respectively, Crestview took $5,980 and$8,970 of cost recovery. These amounts were incorrect because Crestviewapplied the wrong percentage (i.e., those for 27.5-year rather than 39-yearproperty). Crestview should have taken $4,212 and $8,974 cost recoveryin 2018 and 2019. On July 1, 2020, the building was sold for $330,000.Calculate the gain or loss on the sale of the building in 2020.

Step 1: Define Gain or Loss on Sale of an AssetThe gain or loss on the sale of an asset is…

Answered: On March 15, 2018, Crestview…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 31P

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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?
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.
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.
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 November 4, 2019, Blue Company acquired an asset (27.5-year residential real property) for $200,000 for use in its business. In 2019 and 2020, respectively, Blue deducted $642 and $5,128 of cost recovery. These amounts were incorrect; Blue applied the wrong percentages (i.c., those for 39 year rather than 27.5 year assets). Blue should have taken $910 and $7,272 cost recovery in 2019 and 2020, respectively. On January 1, 2021, the asset was sold for $180,000. If required, round all computations to the nearest dollar. Click here to access the depreciation tables in the textbook. a. The adjusted basis of the asset at the end of 2020 is $ b. The cost recovery deduction for 2021 is $ c. The loss on the sale of the asset in 2021 is
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HMI Building Ltd. (HBL) purchased a piece of vacant land on March 1, 2020, for$345,000, and incurred an additional $24,000 in transaction costs as part of thispurchase. HBL built an apartment building on this land for $1,235,000, which wascompleted on November 30, 2020, and is expected to have a useful life of 50 years.HBL incurred an additional $1,500 in legal costs on November 30, 2020, to register theaddition of the property to the land title. In December 2020, HBL incurred $35,000 incosts to repair accidental employee damage to the apartment building, which occurredwhen construction equipment was being removed from the premises.HBL had the investment property appraised on December 31, 2020, and the value ofthe property was determined to be $1,655,000. HBL follows IFRS for reportingpurposes.Required:a) Assume that HBL uses the cost model to classify the investment property and usesthe straight-line method to record depreciation. Prepare the journal entries requiredfor HBL to record…
On January 2, 2018, Orenge Corporation purchased equipment for $300,000 with an ADS recovery period of 10 years and a MACRS useful life of 7 years. Section 179 was not elected. MACRS depreciation properly claimed on the asset, including depreciation in the year of sale, totaled $79,605. The equipment was sold on July 1, 2019, for $290,000. As a result of the sale, the adjustment to taxable income needed to arrive at current E & P is: a. No adjustment is required. b. Decrease $49,605. c. Increase $49,605. d. Decrease $79,605. e. None of the above. Please explain step by step ?
On March 31, 2024, Susquehanna Insurance purchased an office building for $12, 600, 000. Based on their relative fair values, one - third of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased separately from office equipment on the same date for $1,380, 000 and $880, 000, respectively. The company uses the straight - line method to depreciate its buildings and the double - declining - balance method to depreciate all other depreciable assets. The estimated useful lives and residual values of these assets are as follows: Service Life Residual Value Building 40 10% of cost Furniture and fixtures 20 10% of cost Office equipment 10 $ 48, 000 Required: Calculate depreciation for the years ended December 31, 2024 and 2025. What book values would be reported in the December 31, 2025, balance sheet (including land)?
On March 31, 2024, Susquehanna Insurance purchased an office building for $12,300,000. Based on their relative fair val of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased sep office equipment on the same date for $1,370,000 and $870,000, respectively. The company uses the straight-line methc depreciate its buildings and the double-declining-balance method to depreciate all other depreciable assets. The estimat lives and residual values of these assets are as follows: Building Furniture and fixtures Office equipment Service Life 30 10 5 Residual Value 10% of cost 10% of cost Required: 1. Calculate depreciation for the years ended December 31, 2024 and 2025. 2. What book values would be reported in the December 31, 2025, balance sheet (including land)? $ 47,000 Complete this question by entering your answers in the tabs below. 2024 Required 1 Required 2 Calculate depreciation for the years ended December 31, 2024 and…
Magnus Corporation purchased $90,000 of five-year equipment on March 10, 2019 and elected to expense $20,000 of the cost under Section 179. Compact sells the equipment on July 30, 2021, for $95,000. Compact deducted $25,200 under MACRS depreciation. What is the proper classification of the gain? Group of answer choices Section 1245 ordinary income is $50,200; Section 1231 gain is $0 Section 1245 ordinary income is $0; Section 1231 gain is $50,200 Section 1245 ordinary income is $5,000; Section 1231 gain is $45,200 Section 1245 ordinary income is $45,200; Section 1231 gain is $5,000
On January 1, 2019, Ferrothorn Co. sold equipment, to its subsidiary, Klang Corp., for P115,000. The equipment had cost P125,000 and the balance in accumulated depreciation was P45,000. The equipment had an estimated remaining useful life of eight years and P0 salvage value. Both companies use straight-line depreciation. On their separate 2019 income statements, Ferrothorn and Klang reported depreciation expense of P84,000 and P60,000 respectively. The amount of depreciation expense on the consolidated income statement for 2019 would have been:

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