The Company purchased an asset on January 1, 2005, for $200,000. The straight-line method of depreciation is used for book purposes, resulting in depreciation of $50,000 per year. An accelerated method is used for tax purposes, resulting in depreciation of $80,000, $60,000, $40,000, and $20,000 for the years 2005, 2006, 2007, and 2008, respectively. Assume that the tax rate is 40 percent for all years and that depreciation is the only temporary difference between book and tax purposes. The 2005 journal entry would include a: A. debit to Deferred Tax Liability of $12,000 B. debit to Deferred Tax Liability of $4,000 C. credit to Deferred Tax Asset of $4,000 D. credit to Deferred Tax Liability of $12,000 Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Maintenance department has 50 employees. Personnel department has 800 budgeted maintenance hours. Production department A has 200 employees and 1200 budgeted maintenance hours. Production department B has 600 employees and 600 budgeted maintenance hours. 1. Using the direct method, what amount of Maintenance Department costs will be allocated to Department B? 2. Using the direct method, what amount of Personnel Department costs will be allocated to Department B? 3. Using the step-down method, what amount of Maintenance Department cost will be allocated to Department B assuming the maintenance department is allocated first (of the two service departments)? 4. Using the direct method, what amount of Personnel Department costs will be allocated to
The Company purchased an asset on January 1, 2005, for $200,000. The straight-line method of depreciation is used for book purposes, resulting in depreciation of $50,000 per year. An accelerated method is used for tax purposes, resulting in depreciation of $80,000, $60,000, $40,000, and $20,000 for the years 2005, 2006, 2007, and 2008, respectively. Assume that the tax rate is 40 percent for all years and that depreciation is the only temporary difference between book and tax purposes. The 2005 journal entry would include a: A. debit to Deferred Tax Liability of $12,000 B. debit to Deferred Tax Liability of $4,000 C. credit to Deferred Tax Asset of $4,000 D. credit to Deferred Tax Liability of $12,000 Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Maintenance department has 50 employees. Personnel department has 800 budgeted maintenance hours. Production department A has 200 employees and 1200 budgeted maintenance hours. Production department B has 600 employees and 600 budgeted maintenance hours. 1. Using the direct method, what amount of Maintenance Department costs will be allocated to Department B? 2. Using the direct method, what amount of Personnel Department costs will be allocated to Department B? 3. Using the step-down method, what amount of Maintenance Department cost will be allocated to Department B assuming the maintenance department is allocated first (of the two service departments)? 4. Using the direct method, what amount of Personnel Department costs will be allocated to
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges
Section: Chapter Questions
Problem 1BD
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Question
Transcribed Image Text:The Company purchased an asset on January 1, 2005, for $200,000. The straight-line method of
depreciation is used for book purposes, resulting in depreciation of $50,000 per year. An
accelerated method is used for tax purposes, resulting in depreciation of $80,000, $60,000,
$40,000, and $20,000 for the years 2005, 2006, 2007, and 2008, respectively. Assume that the tax
rate is 40 percent for all years and that depreciation is the only temporary difference between
book and tax purposes. The 2005 journal entry would include a:
A. debit to Deferred Tax Liability of $12,000
B. debit to Deferred Tax Liability of $4,000
C. credit to Deferred Tax Asset of $4,000
D. credit to Deferred Tax Liability of $12,000
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance
Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours.
Personnel Department costs of $100,000 are allocated based on the number of employees.
The costs of operating departments A and B are $160,000 and $240,000, respectively. Data
on budgeted maintenance-hours and number of employees are as follows:
Maintenance department has 50 employees.
Personnel department has 800 budgeted maintenance hours.
Production department A has 200 employees and 1200 budgeted maintenance
hours.
Production department B has 600 employees and 600 budgeted maintenance hours.
1. Using the direct method, what amount of Maintenance Department costs will be allocated
to Department B?
2. Using the direct method, what amount of Personnel Department costs will be allocated to
Department B?
3. Using the step-down method, what amount of Maintenance Department cost will be
allocated to Department B assuming the maintenance department is allocated first (of the
two service departments)?
4. Using the direct method, what amount of Personnel Department costs will be allocated to
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