rm.3 Yellow Ltd. is engaged in manufacturing and processing, which is 95% of their business, with aDecember 31 year-end. On January 1, 2023, the balances with regards to capital assets were asfollows:Class 10.1- automobileUCC17,850Cost34,000NBV12,000During 2023, the automobile was sold for $21,000. A new automobile was purchased for $45,200,which included HST of $5,200 (13%).Required:Determine the tax consequences to Yellow Ltd. that result from the automobiles in 2023, includingthe UCC balance for January 1, 2024. (8 marks, 11 minutes)

To determine the tax consequences for Yellow Ltd. and the UCC balance for January 1, 2024, we'll go…

Answered: Yellow Ltd. is engaged in manufacturing…

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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A company has a January 1, 2021 balance for CCA class 53 of $75,000. During 2021, the company acquired additional Class 53 assets for a total cost of $5,000,000. Also, one of the several Class 53 assets was sold during the year for proceeds of $500,000. It had a cost of $3,000,000. Which of the following answers corresponds to the maximum CCA allowed for the company's Class 53 for the year 2021? $3,412,500 $4,537,500 $1,162,500 $3,537,500 $2,537,500 $5,037,500 None of the choices shown. $4,787,500
AMP Corporation (calendar year-end) has 2022 taxable income of $1,900,000 for purposes of computing the $179 expense. During 2022, AMP acquired the following assets: (Use MACRS Table 1. Table 2. Table 3. Table 4 and Table 5) Asset Machinery Computer equipment Office building Total Placed in Service September 12 Basis $ 1,390,000 February 101 April 2 415,000 $ 2,335,000 530,000 b. What is the maximum total depreciation, Including $179 expense, that AMP may deduct in 2022 on the assets it placed in service in 2022, assuming no bonus depreciation? Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Maximum total depreciation (including $170 expense), $ 1,315,000
Grantner Industries had the following Undepreciated Capital Cost (UCC) balances as of January 1, 2021: Class 1 $412,900 Class 10 $210,000 You have been given the following information: Class 1: The January 1, 2021, UCC balance in class 1 includes a single building that was acquired in 2006 for $1,100,000: $400,000 allocated to land, with the remainder to building. On May 15, 2021, the building and the land were sold for $750,000, allocated as $400,000 to land with the remainder to building. Class 10: The January 1, 2021 UCC balance represents 4 vehicles. The capital cost totaled $310,000. The vehicles were sold for total proceeds of $225,000 on October 31, 2021. Required: Calculate the maximum Capital Cost Allowance (CCA) for the year ending December 31, 2021. Your answer should include the maximum that can be deducted for each CCA class. Also, indicate any amount of capital gains, recapture, or terminal loss that results.
Machine P was acquired on April 1, 2019 in exchange for 400, 000 face amount of bonds payable selling at 94, and maturing on April 1,2029 . The accountant recorded acquisition by a debit to Machinery and a credit to Bonds Payable for 400, 000 Straight line Depreciation was recorded based on a 5-year economic life and amounted to 54,000 for nine months In the computation of depreciation , residual value of 40,000 was used. What is the initial carrying amount of the PPE? What is the carrying amount if the PPE as of December 31, 2020?
Kingbird Assets Inc., a publicly listed company, has a building with an initial cost of $371,000. At December 31, 2023, the date of revaluation, accumulated depreciation amounted to $113,000. The fair value of the building, by comparing it with transactions involving similar assets, is assessed to be $283,800. On January 5, 2024, Kingbird sold the building for $278,800 cash. Prepare the journal entry to record the sale of the building after having used the revaluation model using the proportionate method.
Use the following information below to answer questions 1 and 2. On January 2, 2024, Rainbow, Inc. purchased 18% of Skittles Corporation's common sto for $120,000. At the time of the investment, the book value and fair value of Skittles' net assets were equal except for a tract of land which had appreciated by $75,000. The following additional information was obtained from the financial statements for Skittles: Net income-year ended December 31, 2024 Net income-year ended December 31, 2025 Dividends paid to common shareholders in 2024 Dividends paid to common shareholders in 2025 $30,000 $70,000 $ 0 $60,000 On December 31, 2024, the fair value of Rainbow's investment in the common stock of Skiles was $115,000, and on December 31, 2025, its fair value was $140,000. 1. Assume Rainbow does not have significant influence over Skittles. How much would Rainbow report in its 2025 income statement related to this investment? A. $60,000 B. $35,800 C. $30,800 D. $12,600 E. $1,800 2. Assume…
AMP Corporation (calendar year-end) has 2022 taxable income of $1,900,000 for purposes of computing the $179 expense. During 2022, AMP acquired the following assets: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Asset Placed in Service Machinery September 12 Computer equipment Office building February 10 April 2 Basis $ 1,550,000 365,000 480,000 Total $ 2,395,000 b. What is the maximum total depreciation, including §179 expense, that AMP may deduct in 2022 on the assets it placed in service in 2022, assuming no bonus depreciation?
AMP Corporation (calendar year-end) has 2022 taxable income of $1,900,000 for purposes of computing the §179 expense. During 2022, AMP acquired the following assets: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Asset Placed in Service Basis Machinery September 12 $ 1,380,000 Computer equipment February 10 410,000 Office building April 2 525,000 Total $ 2,315,000 a. What is the maximum amount of §179 expense AMP may deduct for 2022?
Assume that Timberline Corporation has 2022 taxable income of $246,000 for purposes of computing the §179 expense. It acquired the following assets in 2022: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Asset Purchase Date Basis Furniture (7-year) December 1 $ 432,000 Computer equipment (5-year) February 28 96,000 Copier (5-year) July 15 36,000 Machinery (7-year) May 22 486,000 Total $ 1,050,000 What would Timberline's maximum depreciation deduction be for 2022 if the machinery cost $3,560,000 instead of $486,000 and assuming no bonus depreciation?
Assume that Timberline Corporation has 2022 taxable income of $246,000 for purposes of computing the §179 expense. It acquired the following assets in 2022: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) Asset Purchase Date Basis Furniture (7-year) December 1 $ 432,000 Computer equipment (5-year) February 28 96,000 Copier (5-year) July 15 36,000 Machinery (7-year) May 22 486,000 Total $ 1,050,000 What would Timberline's maximum depreciation deduction be for 2022 assuming no bonus depreciation?
Maple Enterprises Ltd. has always claimed maximum CCA. Maple had the net income of $121,000 excluding the following capital transactions: The undepreciated capital cost of certain CCA classes at the end of the previous taxation year was as follows: $242,000 (one building in class) 229,900 1. 2 3. Class 1 Class 8 In 2020, the company expanded into the manufacturing business by purchasing the following assets: $36,300 12,000 Equipment (manufacturing) Product licence for an indefinite period The building was sold in 2020 for $314,600 (original cost-$278,300). During 2020, the company purchased office furniture for $16,900. Required: Complete the table below to calculate Maples's net income for tax purposes for the 2020 taxation year. (If an Item is not relevant, leave blank. Use a minus sign (-) when entering numbers that reduce UCC.) UCC, beginning of year Add Purchases Less Disposal Recapture Less CCA Ending UCC Capital Gain Taxable Capital Gain Business income Net Income for Tax…
Matrix Inc. borrowed $1,000,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October 31, 2019. Expenditures related to this building were: January 1 $252,000 (includes cost of purchasing land of $150,000) May 1 320,000 July 1 450,000 October 31 275,000 In addition, Matrix had additional debt (unrelated to the construction) of $500,000 at 9% and $800,000 at 10%. All debt was outstanding for the entire year. Required: Compute the amount of interest capitalized related to the construction of the building. $fill in the blank If the expenditures are assumed to have been incurred evenly throughout the year:Compute weighted average accumulated expenditures $fill in the blank Compute the amount of interest capitalized on the building $fill in the blank

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