Required information[The following information applies to the questions displayed below.]Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2020. In the processof setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2020:Date Placed inAssetCostService$ 360,0001,602,00082,000Office furnitureMachineryUsed delivery truck**Not considered a luxury automobile.02/03/202007/22/202008/17/2020During 2020, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2021 toincrease its production capacity. These are the assets acquired during 2021:Date Placed inAssetCostServiceComputers and information systemLuxury autotAssembly equipmentStorage building$ 442,00090,5001,410,00003/31/202105/26/202108/15/202111/13/2021700,000tUsed 100% for business purposes.Karane generated taxable income in 2021 of $1,785,000 for purposes of computing the $179 expense limitation.(Use MACRS Table 1, Table 2, Table 3, Table 4, Table 5, and Exhibit 10-10.) (Leave no answer blank. Enter zero ifapplicable. Input all the values as positive numbers.)Required:b. Compute the maximum 2021 depreciation deductions, including $179 expense (ignoring bonus depreciation). Required:b. Compute the maximum 2021 depreciation deductions, including $179 expense (ignoring bonus depreciation).CurrentTotal CostSection 179MACRS BasisMACRSDepreciationDescriptionCostExpenseRecoveryDeduction2020 AssetsOffice furnitureMachineryUsed delivery truck2021 AssetsComputers and Information SystemLuxury AutoAssembly EquipmentStorage BuildingTotal

Section 179 of the IRS (US Tax Law) provides that a taxpayer can take a deduction of cost of the…

Required: b. Compute the maximum 2021 depreciation deductions, including §179 expense (ignoring bonus depreciation). Description 2020 Assets Office furniture Machinery Used delivery truck 2021 Assets Computers and Information System Luxury Auto Assembly Equipment Storage Building Total Cost Section 179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction

Required: b. Compute the maximum 2021 depreciation deductions, including §179 expense (ignoring bonus depreciation). Description 2020 Assets Office furniture Machinery Used delivery truck 2021 Assets Computers and Information System Luxury Auto Assembly Equipment Storage Building Total Cost Section 179 Expense MACRS Basis Current MACRS Depreciation Total Cost Recovery Deduction

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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The fact that generally accepted accounting principles allow companies flexibility in choosing between certain allocation methods can make it difficult for a financial analyst to compare periodic performance from firm to firm. Suppose you were a financial analyst trying to compare the performance of two companies. Company A uses the double-declining- balance depreciation method. Company B uses the straight-line method. You have the following information taken from the 12/31/2021 year-end financial statements for Company B: Income Statement Depreciation expense $10,000 Balance Sheet Assets: Plant and equipment, at cost Less: Accumulated depreciation Net $ 200,000 (40,000) $ 160,000 You also determine that all of the assets constituting the plant and equipment of Company B were acquired at the same time, and that all of the $200,000 represents depreciable assets. Also, all of the depreciable assets have the same useful life and residual values are zero. Required: 1. In order to compare…
______21. The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary costs to get the asset in place and ready for use. ____ 22. An estimate of the amount which an asset can be sold at the end of its useful life is called residual value. ____ 23. Federal unemployment taxes are paid by the employer and the employee. ____ 24. When minor errors occur in the estimates used in the determination of depreciation, the amounts recorded for depreciation expense in the past should be corrected. ____ 25. Residual value is not relevant when calculating the annual depreciation expense using the double declining-balance method (do not consider the calculation for the final year). True and False questions
Case Study 1 Assets Complete the depreciation worksheet below. (Only number entries for all but Date Placed in Service) Description of Property Building Espresso Machine 1 Espresso Machine 2 Freezer New Grinder AC Unit (7 year) 2018 Toyota Corolla Total 2022 Depreciation Deduction allowed on the Tax Return Date Placed in Service 01/01/2019 01/01/2019 01/01/2019 07/01/2021 03/15/2022 07/01/2022 xx/xx/xxXxxx Cost $25,000 3,500 3,500 1,500 2,000 1,200 Section 179* Prior Depreciation Years 1,897 2,492 2,492 300 Want to review the scenari At any time, select the "?" bu screen to display the initial pr *Section 179 Special Añowance, and Other Basis Reductions Recovery Period Depreciation Deduction Julia C Julia Jimenez, Owner Hav A Java
Case E Sanders Company purchased the following on January 1, 2019: Office equipment at a cost of $60,000 with an estimated useful life to the company of three years and a residual value of $15,000. The company uses the double-declining-balance method of depreciation for the equipment. Factory equipment at an invoice price of $880,000 plus shipping costs of $20,000. The equipment has an estimated useful life of 100,000 hours and no residual value. The company uses the units-of-production method of depreciation for the equipment. A patent at a cost of $330,000 with an estimated useful life of 15 years. The company uses the straight-line method of amortization for intangible assets with no residual value. The company's year ends on December 31. Required: 1-a. Prepare a partial depreciation schedule of office equipment for 2019, 2020, and 2021. 1-b. Prepare a partial depreciation schedule of factory equipment. The company used the equipment for 8,000 hours in 2019, 9,200 hours in 2020, and…
Vikram
Computing Partial Period Depreciation under Multiple Depreciation Methods Compute depreciation expense for 2021 for each asset #1, #2, #3, and #4. Note: Do not round until your final answer. Round your final answer to the nearest whole dollar. Acquisition Acquisition Useful Salvage 2021 Depreciation Value Asset Date Depreciation Method Cost Life Expense #1 Jan. 1, 2020 Straight-line $4,000 4 years $200 $ 950 v #2 Aug. 30, 2020 Double-declining-balance 5,800 8 years 400 $ 1,125 x #3 Feb. 1, 2021 Sum-of-the-years'-digits 7,200 4 years 320 $ 1,147 x #4 Jul. 31, 2021 Straight-line 13,520 8 years 0 $