Calculate Wes's lowest taxable income, after any depletion deductions. Wes acquired a mineral interest during the year for $10,000,000. Ageological survey estimated that 250,000 tons of the mineral remainedin the deposit. During the year, 80,000 tons were mined, and 45,000tons were sold for $12,000,000. Other related expenses amounted to$5,000,000. Assume the mineral depletion rate is 22%.Calculate Wes's lowest taxable income, after any depletion deductions.

To calculate Wes's lowest taxable income after considering the depletion deductions, we must…

Answered: Wes acquired a mineral interest during…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 56P

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Similar questions

A piece of equipment purchased at a cost $250,000 generated new income of $80,000 per year, witha annual operating costs of $10,000. The equipment was depreciated using MACRS method as 7-year property. At the end of five years, the management decided to sell the equipment for a modest price of $75,000. The company pays taxes at an effective tax rate of 23%. Which of the following was closest to the amount of taxes the company paid in year 5? $15,000 $8,000 $33,000 $11,000
Miller Mining acquired rights to a tract of land with the intent of extracting from the land a valu-able mineral. The cost of the rights was $2,500,000 and an estimated 10,000 tons of the mineral are expected to be extracted. Assuming that 1,600 tons of the mineral are actually extracted in the firstyear, determine the amount of depletion expense that should be recognized for that year.
Vinubhai
Watson Tax Planning Service has the following plant assets: Communications Equipment: Cost, $6,960 with useful life of eight years; Furniture: Cost, $18,000 with useful life of 12 years; and Computer: Cost, $12,400 with useful life of four years. (Assume residual value of all the assets is zero.) Watson's monthly depreciation expense calculated using the straightline method is ________. (Round any intermediate calculations to two decimal places, and your final answer to the nearest cent.) A. $258.33 B. $72.50 C. $125.00 D. $455.83
Company J bought a piece of equipment for $200,000. This equipment has a useful life of 10 years and a salvage value of $40,000. The company has been using the seven-year MACRS property class to depreciate the asset for tax pur poses. At the end of year 4, the company sold the equipment for $120,000. The tax rate is 40%. What are the net proceeds (after tax) from the sale of the equipment?
In year 0, an electrical appliance company purchased an industrial robot costing $350,000. The robot is to be used for welding operations, classified as seven-year recovery property, and has been depreciated by the MACRS method. If the robot is to be sold after five years, compute the amounts of gains (losses) for the following two salvage values (assume that both capital gains and ordinary incomes are taxed at 34%): $20,000 $99,000
A distribution center purchased an equipment for $100,000 and has depreciated the equipment using the MACRS depreciation schedule as a 7-year property. The operating income in year 2 was $200,000 and the expenses were $87,000. If the company is in the 40% income tax bracket. i) What is the depreciation in year 2? $ ii) What is the taxable income in year 2? $ iii) What is the tax in year 2? $ iv) What is the book value of the equipment after year 2? $
Bowtock purchased an item of plant for $2 million on 1 October 20X0. It had an estimated life of 8 years and an estimated residual value of $400000. The plant is depreciated on a straight line basis. The tax authorities do not allow depreciation expense .Instead a tax expense of 40% of the cost of this type of asset can be claimed against income tax in the year of purchase and 20% per annum (on a reducing balance method) of tax base thereafter.The rate of income tax can be taken as 25% . Calculate deferred tax charger / credit in the statement of profit or loss and deferred tax balance in statement of financial position
CC, Inc. purchased two assets during the current year (a full12-month tax year). On August 10 BB Inc. placed in servicecomputer equipment (five-year property) with a basis of $20,000and on November 18 placed in service machinery (seven-yearproperty) with a basis of $10,000. Calculate the maximumdepreciation expense (ignoring §179 and bonus depreciation).a. $6,000.b. $5,429.c. $3,357.d. $857.e. None of the other choices are correct
In year 0, an electrical appliance company purchased an industrial robot costing $350,000. The robot is to be used for welding operations, classified as seven- year recovery property, and has been depreciated by the MACRS method. If the robot is to be sold after five years, compute the amounts of gains (losses) for the following two salvage values (assume that both capital gains and ordinary incomes are taxed at 21%): (a) $20,000 (b) $99,000 pany had sales revenues of
Barton and Barton Company (B&B) purchased construction equipment for $57 million. The equipment was placed in service at the beginning of 20x1. Management estimated the equipment's residual value to be $2 million and used the sum-of-the-years’-digits method to depreciate the equipment over a 10-year life. At the beginning of 20x4, B&B decided to change to the straight-line method. Ignoring income taxes, prepare the journal entry relating to the equipment for 20x4. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5 and 5,000,000 should be entered at 5.0).)
Silver Company purchased a machine for use in the business. The purchase price was $55,000 and the related sales tax totaled $500. Sliver paid $1,000 to have the machine delivered to its factory and $2,000 to have it assembled. Over the five-year life of the machine, maintenance cost of $800 will be incurred annually. What is the capitalized cost of this asset? Manning Company purchased a factory for $120,000. The factory included land, a building, and equipment. The land contributes 40.8%, the building contributes 49.6%, and the equipment contributes 9.6% of the factory’s value. How much of the cost should be assigned to the building? On January 1, Year 1, the Starshina Company paid $25,000 for a photocopier with an estimated useful life of 4 years, and an estimated residual value of $5,000. The company uses the straight-line method. What is the amount of depreciation expense for Year 2?

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