Problem 07-34 (Static) [LO 7-1, 7-5, 7-9, 7-11) SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. . SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. . SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. SEP's net book income before tax Adjustments Research costs Depreciation Amortization SEP's taxable income $ $ Amount 918,000 (75,000) (21,778) (1.832) 894,300

Problem 07-34 (Static) [LO 7-1, 7-5, 7-9, 7-11) SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. . SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. . SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. SEP's net book income before tax Adjustments Research costs Depreciation Amortization SEP's taxable income $ $ Amount 918,000 (75,000) (21,778) (1.832) 894,300

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required Information Problem 09-59 (LO 09-4) (Algo) [The following information applies to the questions displayed below.] Georgio owns a 10 percent profits and capital interest in Rain Tree LLC. For the current year, Rain Tree had the following revenues, expenses, gains, and losses: Sales revenue Gain on sale of land (51231) Cost of goods sold Depreciation-MACRS §179 deduction* Employee wages Nondeductible fines and penalties Municipal bond interest Short-term capital gains Guaranteed payment to Sandra $ 85,000 13,600 (46,750) (4,250) (14,500) (20,000) (3,800) 7,300 6,150 (3,700) *Assume the $179 property placed in service limitation does not apply. Problem 09-59 Part b (Algo) b. What are Georgio's separately stated items for the year? Description Separately Stated Items on Schedule K-1: Total Amount Allocated to Georgio
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Required Information Problem 09-59 (LO 09-4) (Algo) [The following information applies to the questions displayed below.] Georgio owns a 10 percent profits and capital interest in Rain Tree LLC. For the current year, Rain Tree had the following revenues, expenses, gains, and losses: Sales revenue Gain on sale of land ($1231) Cost of goods sold Depreciation-MACRS §179 deduction* Employee wages Nondeductible fines and penalties Municipal bond interest Short-term capital gains. Guaranteed payment to Sandra *Assume the §179 property placed in service limitation does not apply. Description Problem 09-59 Part a (Algo) a. How much ordinary business income (loss) is allocated to Georgio for the year? Sales revenue Ordinary Business Income $ 85,000 13,600 (46,750) (4,250) (14,500) Total Amount Allocated to Georgio (20,000) (3,800) 7,300 6,150 (3,700)
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SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. • SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. • SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. Answer is complete but not entirely correct. Amount $ 918,000✔ SEP's net book income before tax Adjustments: Research costs…
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