You purchased a stamping machine that cost $60,000 five years ago. At thattime, the machine was estimated to have a service life of five years with salvagevalue of $5,000. These estimates are still good. The property has been depreciatedaccording to a seven-year MACRS property class. Now (at the end of year5 from purchase) you are considering selling the machine at $10,000. What book value should you use in determining the taxable gains?(a) $10,000(b) $13,386(c) $16,065(d) $17,520PROBLEMS Note: Unless otherwise specified, use current tax rates for corporate taxes. Check the IRS website for the most current tax rates for corporations.Depreciation Concept 9.1 Identify which of the following expenditures is considered as a capital expenditurethat must be capitalized (depreciated):(a) Purchase land to build a warehouse at $300,000.(b) Purchased a copy machine at $15,000.(c) Installed a conveyor system at a cost of $55,000 to automate some part of production processes.(d) Painted the office building, both interior and exterior, at a cost of $22,000.( e) Repaved the parking lot at a cost of $25,000.(f) Installed a purified water fountain in the employee lounge at a cost of$3,000.(g) Purchased a spare part for a stamping machine at a cost of $3,800.(h) Paid $12,000 to lease a dump truck for six months.(i) Purchased a patent on an energy-saving device over five years at a cost of $30,000.
You purchased a stamping machine that cost $60,000 five years ago. At that
time, the machine was estimated to have a service life of five years with salvage
value of $5,000. These estimates are still good. The property has been
according to a seven-year MACRS property class. Now (at the end of year
5 from purchase) you are considering selling the machine at $10,000. What book value should you use in determining the taxable gains?
(a) $10,000
(b) $13,386
(c) $16,065
(d) $17,520
PROBLEMS Note: Unless otherwise specified, use current tax rates for corporate taxes. Check the IRS website for the most current tax rates for corporations.
Depreciation Concept 9.1 Identify which of the following expenditures is considered as a capital expenditure
that must be capitalized (depreciated):
(a) Purchase land to build a warehouse at $300,000.
(b) Purchased a copy machine at $15,000.
(c) Installed a conveyor system at a cost of $55,000 to automate some part of production processes.
(d) Painted the office building, both interior and exterior, at a cost of $22,000.
( e) Repaved the parking lot at a cost of $25,000.
(f) Installed a purified water fountain in the employee lounge at a cost of
$3,000.
(g) Purchased a spare part for a stamping machine at a cost of $3,800.
(h) Paid $12,000 to lease a dump truck for six months.
(i) Purchased a patent on an energy-saving device over five years at a cost of $30,000.
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