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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

FINANCIAL ACCOUNTING
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 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
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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