Concepts in Federal Taxation 2019 (with Intuit ProConnect Tax Online 2017 and RIA Checkpoint 1 term (6 months) Printed Access Card)
26th Edition
ISBN: 9781337702621
Author: Kevin E. Murphy, Mark Higgins
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 3, Problem 43P
To determine
Calculate the gain or loss realized from the sale of lots.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On March 1, 2017, Sunland Company acquired real estate, on which it planned to construct a small office building, by paying $84,000 in cash. An old warehouse on the property was demolished at a
cost of $9,000; the salvaged materials were sold for $1,860. Additional expenditures before construction began included $1,360 attorney's fee for work concerning the land purchase, $4,900 real
estate broker's fee, $8,860 architect's fee, and $14,800 to put in driveways and a parking lot.
(a) Determine the amount to be reported as the cost of the land.
Cost of land
On December 31, 2016, Marin Inc. borrowed $3,720,000 at 13% payable annually to finance the construction of a new building. In 2017, the company made the following expenditures related to this building: March 1, $446,400; June 1, $744,000; July 1, $1,860,000; December 1, $1,860,000. The building was completed in February 2018. Additional information is provided as follows.
1. Other debt outstanding 10-year, 14% bond, December 31, 2010, interest payable annually $4,960,0006-year, 11% note, dated December 31, 2014, interest payable annually $1,984,0002. March 1, 2017, expenditure included land costs of $186,000 3. Interest revenue earned in 2017 $60,760
Determine the amount of interest to be capitalized in 2017 in relation to the construction of the building.
The amount of interest
On January 2, 2017, Indian River Groves began construction of a new citrus processing plant. The
automated plant was finished and ready for use on September 30, 2018. Expenditures for the
construction were as follows:
48.
January 2, 2017
September 1, 2017
December 31, 2017
March 31, 2018
September 30, 2018
$ 600,000
1,800,000
1,800,000
1,800,000
1,200,000
Indian River Groves borrowed $3,300,000 on a construction loan at 12% interest on January 2,
2017. This loan was outstanding during the construction period. The company also had S12,000,000
in 9% bonds outstanding in 2017 and 2018.
The interest capitalized for 2018 was:
a. $374,220
b. $354,915
c. $ 77,220
d. $297,000
Chapter 3 Solutions
Concepts in Federal Taxation 2019 (with Intuit ProConnect Tax Online 2017 and RIA Checkpoint 1 term (6 months) Printed Access Card)
Ch. 3 - Prob. 1DQCh. 3 - Prob. 2DQCh. 3 - Prob. 3DQCh. 3 - Prob. 4DQCh. 3 - Prob. 5DQCh. 3 - Prob. 6DQCh. 3 - Prob. 7DQCh. 3 - Prob. 8DQCh. 3 - Prob. 9DQCh. 3 - Prob. 10DQ
Ch. 3 - Prob. 11DQCh. 3 - Prob. 12DQCh. 3 - Prob. 13DQCh. 3 - Prob. 14DQCh. 3 - Prob. 15DQCh. 3 - Prob. 16DQCh. 3 - Prob. 17DQCh. 3 - Prob. 18DQCh. 3 - Prob. 19DQCh. 3 - Prob. 20DQCh. 3 - Prob. 21DQCh. 3 - Are all losses realized on the sale of capital...Ch. 3 - Prob. 23DQCh. 3 - Prob. 24DQCh. 3 - Prob. 25DQCh. 3 - Prob. 26DQCh. 3 - Prob. 27DQCh. 3 - Prob. 28DQCh. 3 - Prob. 29DQCh. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - How much taxable income should each of the...Ch. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39PCh. 3 - Prob. 40PCh. 3 - Prob. 41PCh. 3 - Prob. 42PCh. 3 - Prob. 43PCh. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Devi is the chief executive officer of Nishida...Ch. 3 - Prob. 48PCh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - Prob. 53PCh. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Prob. 56PCh. 3 - Prob. 57PCh. 3 - Prob. 58PCh. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Prob. 61PCh. 3 - Prob. 62PCh. 3 - Determine whether the taxpayer has income that is...Ch. 3 - Prob. 64PCh. 3 - Prob. 65PCh. 3 - Prob. 66PCh. 3 - Prob. 67PCh. 3 - Prob. 68PCh. 3 - Prob. 69PCh. 3 - Prob. 70PCh. 3 - Prob. 71PCh. 3 - Prob. 72PCh. 3 - Prob. 73PCh. 3 - Prob. 74PCh. 3 - Prob. 75PCh. 3 - Prob. 76PCh. 3 - During the last five months of the year, Dwana...Ch. 3 - Prob. 78PCh. 3 - Prob. 79PCh. 3 - Prob. 80PCh. 3 - Prob. 81PCh. 3 - Lorene, Inc., owns an apartment complex. The terms...Ch. 3 - Prob. 83PCh. 3 - Prob. 84PCh. 3 - Prob. 85PCh. 3 - Prob. 86PCh. 3 - Prob. 87PCh. 3 - Prob. 88PCh. 3 - Prob. 89IIPCh. 3 - Prob. 90IIPCh. 3 - Prob. 91IIPCh. 3 - Prob. 92IIPCh. 3 - Prob. 93IIPCh. 3 - Prob. 94IIPCh. 3 - Prob. 95IIPCh. 3 - Prob. 96IIPCh. 3 - Prob. 97IIPCh. 3 - Prob. 105DCCh. 3 - Kerry is employed as a ticket vendor at an...Ch. 3 - Prob. 107DCCh. 3 - Prob. 108DCCh. 3 - Prob. 109EDC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- On January 1 2017, George Company purchased a new building. George paid $25,000 as a down payment and issued a long-term note to finance the balance. The note, which carries an interest rate of 4%, requires George to make annual payments of $55,000 for six years, with the first payment due on December 31, 2017. How would I find out what amount George should record as the cost of the new building ?arrow_forwardDuring 2017, Reticulated Company constructed a new manufacturing facility at a cost of P30,000,000. The expenditures for this building, which was finished late in 2017, were incurred evenly during the year. The entity had the following loans outstanding at December 31, 2017. 10% note to finance specifically construction of the manufacturing facility, dated January 1, 2017, P10,000,000. Unpaid as of December 31, 2017. Investments were made on the proceeds from this loan and income of P100,000 was realized in 2017. 12%, 20-years bonds payable issued at face value on April 30, 2016, P30,000,000. 8%, 5-years payable, dated March 1, 2016, P10,000,000. What amount of interest is capitalized as cost of the new building? A. 1,550,000 B. 1,450,000 C. 1,400,000 D. 1,500,000arrow_forwardOn March 1, 2017, Geoffrey Company acquired real estate, on which it planned to construct a small office building, by paying $85,000 in cash. An old warehouse on the property was demolished at a cost of $8,200; the salvaged materials were so for $2,200. Additional expenditures before construction began included $1,500 attorney's fee for work concerning the land purchase, $5,500 real estate broker's fee, $9,100 architect's fee, and $16,000 to put in driveways and a parking lot. Instructions (a) Determine the amount to be reported as the cost of the land. (b) For each cost not used in part (a), indicate the account to be increasedarrow_forward
- On January 1, 2016, Randolf Company signed a contract to have Rory Associates construct a manufacturing facility at a cost of $14,000,000. It was estimated that it would take three years to complete the project. Also on January 1, 2016, to finance the construction cost, Randolf borrowed $14,000,000 payable in seven annual installments of $2,000,000 plus interest at the rate of 9%. During 2016, Randolf made progress payments totaling $5,000,000 under the contract, and the average amount of accumulated expenditures was $3,000,000 for the year. The excess borrowed funds were invested in short-term securities, from which Randolf realized investment income of $330,000. What amount should Randolf report as capitalized interest at December 31, 2016? $510,000 $0 $1,260,000 $270,000arrow_forwardJackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2016 for the mining site and spent an additional $600,000 to prepare the mine for the extraction of the copper. After the copper is extracted in approximately four years, the company is required to restore the land to its original condition, including repaving roads and replacing a greenbelt. The company has provided the following three cash flow possibilities for the restoration costs: Cash Outflow Probability 1 $300,000 25% 2 400,000 40% 3 600,000 35% Jackpot purchased some new equipment on July 1, 2016, to aid extraction for $120,000. After the copper is removed from this mine, the equipment will be sold. The credit-adjusted, risk-free rate of interest is 10%. Required: 1. Determine the cost of the copper mine. 2. Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipmentarrow_forwardKobe Company began constructing a building for its own use in February 2017. During 2017, Kobe incurred interest of $70,000 on specific construction debt and $15,000 on other borrowings. Interest computed on the weighted-average amount of accumulated expenditures for the building during 2017 was $60,000. Required: What amount of interest should Kobe capitalize? Prepare the journal entry to record payment of the interest. If interest computed on the weighted-average amount of accumulated expenditures for the building during 2017 was instead $90,000, what amount of interest should Kobe capitalize?arrow_forward
- Maragondon Company had the following borrowings during 2018. The borrowings were made for general purposes but the proceeds were used in part to finance the construction of a new building: Principal Interest 12% bank loan 10,000,000 1,200,000 15% long-term loan 20,000,000 3,000,000 30,000,000 4,200,000 The construction began on January 1, 2018 and was completed on December 31, 2018. Expenditures on the building were made as follows:January 1 8,000,000June 30 8,000,000December 31 4,000,000 The capitalizable borrowing cost isa. 1,680,000b. 1,400,000c. 4,200,000d. 1,620,000 What is the solution for the option A?arrow_forwardOn January 1 2017, George Company purchased a new building. George paid $25,000 as a down payment and issued a long-term note to finance the balance. The note, which carries an interest rate of 4%, requires George to make annual payments of $55,000 for six years, with the first payment due on December 31, 2017. What amount should George record as the cost of the new building (rounded to the nearest whole dollar)?arrow_forwardPrincess Town Insurance Inc., located in a country which has a capital gains tax, purchased a building in February 2018 for $26,000,000. In March 2019, they spent $1, 800,000 to install solar panels for electricity in the building. The building was sold for $39,000,000 in 2020. The annual maintenance cost was $500,000. The cost of advertising the sale of the building and the legal fees amounted to $1,950,000. Capital losses were as follows:2017 - $200,0002018 - $250,000 Required:Calculate the capital gains tax in 2020, assuming a capital gains tax of 20%arrow_forward
- Bright Co. received a government grant of 10,000,000 to install and run a windmill in an economically backward area. The entity had estimated that such a windmill would cost 25,000,000 to construct. The secondary condition attached to the grant is that the entity shall hire labor in the area where the windmill is located. The construction was completed on January 1, 2014. The windmill is to be depreciated using the straight-line method over a period of 10 years. What amount of grant income should be recognized for 2014? O2,500,000 1,500,000 O 1,000,000 5,000,000arrow_forwardOn December 31, 2016, Headland Inc. borrowed $840,000 at 12% payable annually to finance the construction of a new building. In 2017, the company made the following expenditures related to this building: June 1, $336,000; July 1, $504,000; September 1, $1,008,000; December 1, $504,000. The building was completed in April 2018. Additional information is provided as follows. 1. Other debt outstanding 10-year, 10% bond, dated December 31, 2010, interest payable annually $8,400,000 15-year, 12% note, dated December 31, 2004, interest payable annually $2,100,000 2. Interest revenue earned in 2017 $5,040 Prepare the journal entry to record the capitalization of interest and the recognition of interest expense, if any, at December 31, 2017arrow_forwardOn January 1, 2021, Kendall Inc. began construction of an automated cattle feeder system. The system was finished and ready for use on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 266,000 September 1, 2021 $ 345,000 December 31, 2021 $ 345,000 March 31, 2022 $ 345,000 September 30, 2022 $ 266,000 Kendall borrowed $670,000 on a construction loan at 9% interest on January 1, 2021. This loan was outstanding throughout the construction period. The company had $3,850,000 in 8% bonds payable outstanding in 2021 and 2022.What was the interest (using the specific interest method) capitalized for 2022?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Depreciation -MACRS; Author: Ronald Moy, Ph.D., CFA, CFP;https://www.youtube.com/watch?v=jsf7NCnkAmk;License: Standard Youtube License