What is the treatment of a difference between the salvage value and UCC of an asset when the asset is sold? (UCC denotes undepreciated capital cost.) More than one answer may be correct. Multiple select question. The difference remains in the asset pool but does not create tax shield. The difference is realized as gain or loss on the statement of comprehensive income immediately. The difference is not realized as gain or loss on the statement of comprehensive income immediately. The difference remains in the asset pool and continues to create tax shield for as long as pool exist..3

What is the treatment of a difference between the salvage value and UCC of an asset when the asset is sold? (UCC denotes undepreciated capital cost.) More than one answer may be correct. Multiple select question. The difference remains in the asset pool but does not create tax shield. The difference is realized as gain or loss on the statement of comprehensive income immediately. The difference is not realized as gain or loss on the statement of comprehensive income immediately. The difference remains in the asset pool and continues to create tax shield for as long as pool exist..3

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter11: Property Dispositions

Section: Chapter Questions

Problem 20DQ

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What is the treatment of a difference between the salvage value and UCC of an asset when the asset is sold? (UCC denotes undepreciated capital cost.) More than one answer may be correct. Multiple select question. The difference is not realized as gain or loss on the statement of comprehensive income immediately. The difference remains in the asset pool and continues to create tax shield for as long as pool exist. The difference is realized as gain or loss on the statement of comprehensive income immediately. The difference remains in the asset pool but does not create tax shield.
Which one of the following statements is not true regarding depreciation? a. It is a systematic, rational method of allocating the cost of an asset over its useful life b. It attempts to match the costs of acquiring an asset to the benefits to bederived from the asset c. It does not attempt to measure the value of the asset d. It provides funds for the replacement of the asset through tax savings over the asset's life
With respect to transaction and translation gains and losses: a. transaction gains and losses are taxable but have no immediate cash flow impact. b. transaction gains and losses have immediate cash flow and tax consequences, translation gains and losses have neither. c. transaction gains and losses have an immediate cash flow impact, but taxation is deferred until the related assets are sold. d. transaction and translation gains are taxable, but only transaction losses are tax deductible.
What would be the tax treatment of a superficial loss? a. Permanently denied. b. Immediately deductible. c. Deducted from the adjusted cost base (ACB) of the reacquired property. d. Added to the ACB of the reacquired property for the purposes of determining the future capital gain or loss when the property was sold.
The purpose of Sec. 1245 is to eliminate the advantage taxpayers would have if they were able to reduce ordinary income by depreciation deductions and also receive favorable Sec. 1231 treatment when the asset was sold. True False
The income tax rates are the same for capital gains and depreciation recapture of an asset that is depreciated. O True O False
Which of the following statements is correct with respect to the sale of a depreciable asset? Multiple Choice A gain occurs when the selling price exceeds book value. A sale for a gain results in a decrease in total assets. A sale for a loss results in an increase in total assets. A loss occurs when the selling price is more than book value.
Why might it be more advantageous for a taxpayer to demonstrate that they ... Why might it be more advantageous for a taxpayer to demonstrate that they have realised a capital gain, rather than a profit from buying and selling an asset? O a. Capital gains does not apply where the person disposing of the asset did not purchase the asset for profit making purposes. O b. Capital gains can be deferred indefinitely by a taxpayer, until they actually make a capital loss. O c. A capital gain on the disposal of an asset is not subject to tax if the amount was realised for non-business purposes. O d. If a capital gain, then CGT is levied against the difference of the cost base and the disposal amount, and a 50% discount may be available to a non company taxpayer. Which statement is correct? Which statement is correct? O a. A company is resident of Australia if it is incorporated in New South Wales O b. The ATO determines which taxpayers are residents or non-residents through its rulings program…
Will the existence of unused tax losses always lead to the recognition of a deferred tax assets? Explain your answer with suitable example.
1. A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. 2. A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. 3. A permanent difference. (a) ______ For some assets, straight-line depreciation is used for tax purposes while double-declining balance method is used for financial reporting purposes.(b) ______ Warranty expenses are accrued when the sale is made, but cannot be deducted until the work is actually performed.(c) ______ The company uses the percentage of completion method to record revenue on long-term contracts for financial reporting purposes, but the completed contract method is used for tax purposes.(d) ______ Accelerated depreciation is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes, for some equipment.(e) ______ A landlord collects some…
Which of the following statements related to long-lived assets is true? Depreciation is calculated the same for financial reporting purposes and income tax purposes. If a company changes a depreciation estimate, it does not require a prior period adjustment. Depreciation is the process to value an asset at its fair market value. There is only one test to record an asset's impairment.
Where the carrying amount of an asset or liability is different from the tax base a ‘temporary difference’ can arise. Identify the correct statement pertaining to a temporary difference. Select one: a. A temporary difference only occur if the carrying amount of an asset or liability is the same as the tax base b. A temporary difference can never be taxable. c. A temporary difference can never be deductible for tax purposes. d. A temporary difference will result in a decrease (increase) in income tax payable (recoverable) in future periods when the carrying amount of the asset or liability is recovered or settled.