The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation . Given: Purchased computer equipment for $31,000. Equipment has a useful life of 10 years with a salvage value of $1,000. The MACRS class life is 5 years for tax purposes. (a) To determine the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the straight-line method for book purposes and tax purposes.

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Answer 1

Question

Chapter 11, Problem 26E

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Purchased computer equipment for $31,000.

Equipment has a useful life of 10 years with a salvage value of $1,000.

The MACRS class life is 5 years for tax purposes.

(a)

To determine the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the straight-line method for book purposes and tax purposes.

To determine

(b)

To determine what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the double-declining-balance method for both book and tax purposes.

To determine

(c)

To explain: To explain why is depreciation for tax purposes different from depreciation for book purposes even if the company uses the same depreciation method to compute them both.

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Answer 2

Question

Chapter 11, Problem 26E

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Purchased computer equipment for $31,000.

Equipment has a useful life of 10 years with a salvage value of $1,000.

The MACRS class life is 5 years for tax purposes.

(a)

To determine the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the straight-line method for book purposes and tax purposes.

To determine

(b)

To determine what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the double-declining-balance method for both book and tax purposes.

To determine

(c)

To explain: To explain why is depreciation for tax purposes different from depreciation for book purposes even if the company uses the same depreciation method to compute them both.

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Answer 3

Question

Chapter 11, Problem 26E

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Purchased computer equipment for $31,000.

Equipment has a useful life of 10 years with a salvage value of $1,000.

The MACRS class life is 5 years for tax purposes.

(a)

To determine the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the straight-line method for book purposes and tax purposes.

To determine

(b)

To determine what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the double-declining-balance method for both book and tax purposes.

To determine

(c)

To explain: To explain why is depreciation for tax purposes different from depreciation for book purposes even if the company uses the same depreciation method to compute them both.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 26E

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Purchased computer equipment for $31,000.

Equipment has a useful life of 10 years with a salvage value of $1,000.

The MACRS class life is 5 years for tax purposes.

(a)

To determine the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the straight-line method for book purposes and tax purposes.

To determine

(b)

To determine what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the double-declining-balance method for both book and tax purposes.

To determine

(c)

To explain: To explain why is depreciation for tax purposes different from depreciation for book purposes even if the company uses the same depreciation method to compute them both.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 26E

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Purchased computer equipment for $31,000.

Equipment has a useful life of 10 years with a salvage value of $1,000.

The MACRS class life is 5 years for tax purposes.

(a)

To determine the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the straight-line method for book purposes and tax purposes.

To determine

(b)

To determine what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the double-declining-balance method for both book and tax purposes.

To determine

(c)

To explain: To explain why is depreciation for tax purposes different from depreciation for book purposes even if the company uses the same depreciation method to compute them both.

Answer 6

Chapter 11, Problem 26E

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Purchased computer equipment for $31,000.

Equipment has a useful life of 10 years with a salvage value of $1,000.

The MACRS class life is 5 years for tax purposes.

(a)

To determine the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the straight-line method for book purposes and tax purposes.

Answer 7

Chapter 11, Problem 26E

To determine

Introduction: The value of an asset decreases over a period of time due to wear and tear. This reduction in the value of asset is termed as depreciation.

Given:

Purchased computer equipment for $31,000.

Equipment has a useful life of 10 years with a salvage value of $1,000.

The MACRS class life is 5 years for tax purposes.

(a)

To determine the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the straight-line method for book purposes and tax purposes.

Answer 8

To determine

(b)

To determine what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the double-declining-balance method for both book and tax purposes.

Answer 9

To determine

(b)

To determine what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the double-declining-balance method for both book and tax purposes.

Answer 10

To determine

(c)

To explain: To explain why is depreciation for tax purposes different from depreciation for book purposes even if the company uses the same depreciation method to compute them both.

Answer 11

To determine

(c)

To explain: To explain why is depreciation for tax purposes different from depreciation for book purposes even if the company uses the same depreciation method to compute them both.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 11 - Prob. 1Q Ch. 11 - 2. Identify the factors that are relevant in...Ch. 11 - Prob. 3Q Ch. 11 - Prob. 4Q Ch. 11 - Prob. 5Q Ch. 11 - Prob. 6Q Ch. 11 - 7. What basic questions must be answered before...Ch. 11 - Prob. 8Q Ch. 11 - Prob. 9Q Ch. 11 - 10. What are the major factors considered in...

(b) To determine what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the double-declining-balance method for both book and tax purposes.

(c) To explain: To explain why is depreciation for tax purposes different from depreciation for book purposes even if the company uses the same depreciation method to compute them both.

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Chapter 11 Solutions

(b)

To determine what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017, assuming that the company uses the double-declining-balance method for both book and tax purposes.

(c)

To explain: To explain why is depreciation for tax purposes different from depreciation for book purposes even if the company uses the same depreciation method to compute them both.