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A machine is classified as seven-year MACRS
property. Compute the book value for tax purposes
at the end of three years. The cost basis is $185,000.
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- At the beginning of Year 1, Cactus Company has three employees: A, B, and C. Employee A has 3 expected years of future service. Employee B has 4 expected years of future service, and Employee C has 5 expected years of future service. Using the year-of-future-service method, compute the amortization fraction for Years 1 through 5 that Cactus would use to amortize its prior service cost.Grevilla Corporation is a manufacturing company. The corporation has accumulated earnings of $950,000, and it can establish reasonable needs for $400,000 of that amount. Calculate the amount of the accumulated earnings tax (if any) that Grevilla Corporation is subject to for this year. $_____________In the current year, Madison Corporation had 50,000 of taxable income at a tax rate of 25%. During the year, Madison began offering warranties on its products and has a Warranty liability for financial reporting purposes of 5,000 at the end of the year. Warranty expenses are not deductible until paid for income tax purposes. Prepare the journal entry to record Madisons income taxes at the end of the year.
- A file server and peripherals are purchased in December by a calendar-year taxpayer for $8,000. The server will be used for 6 years and be worth $200 at that time. Calculate the depreciation deduction during years 1, 3, and 6. Use straight-line depreciation.A firm purchased an asset with a 5-year life for $90,000, and it cost $10,000 for shipping and installation. According to the current tax laws the cost basis of the asset at time of purchase is:At the end of the year, Huskies Together Company has pretax financial income of $550,000. Included in the $550,000 is $70,000 interest income on municipal bonds, $25,000 fine for dumping hazardous waste, and depreciation of $60,000. Depreciation for tax purposes is $45,000. Compute income taxes payable, assuming the tax rate is 30% for all periods. Prepare the journal entry at the end of the year.
- In 2018, North Company rented a villa for three years and received a total of $60,000. The rent is earned equally over the period 2018-2020. For tax purposes, North should report the full $60,000 on 2018 tax return form. By year end, the company reported an income tax expense of $22,000 and income tax payable of $37,000.In 2019, the company terminated a maintenance contract and agreed to pay $10,000 per year for 2019-2021. The total termination amount is fully deducted for financial reporting purposes and deducted as paid for tax purposes. The pretax financial income for 2019 is $90,000. The tax rates are 30% for 2018 and 35% for 2019. By end of 2019, the government announced the change of tax rate for future periods. 1. Prepare the journal entry to record income taxes for 2019 2. Which approach have you applied in answering part? and what are the main objectives of this approach?In 2018, North Company rented a villa for three years and received a total of $60,000. The rent is earned equally over the period 2018-2020. For tax purposes, North should report the full $60,000 on 2018 tax return form. By year end, the company reported an income tax expense of $22,000 and income tax payable of $37,000.In 2019, the company terminated a maintenance contract and agreed to pay $10,000 per year for 2019-2021. The total termination amount is fully deducted for financial reporting purposes and deducted as paid for tax purposes. The pretax financial income for 2019 is $90,000. The tax rates are 30% for 2018 and 35% for 2019. By end of 2019, the government announced the change of tax rate for future periods.a. Prepare the journal entry to record income taxes for 2019.b. Which approach have you applied in answering part (a)? what are the main objectives of this approach?In 2018, North Company rented a villa for three years and received a total of $60,000. The rent is earned equally over the period 2018-2020. For tax purposes, North should report the full $60,000 on 2018 tax return form. By year end, the company reported an income tax expense of $22,000 and income tax payable of $37,000. In 2019, the company terminated a maintenance contract and agreed to pay $10,000 per year for 2019-2021. The total termination amount is fully deducted for financial reporting purposes and deducted as paid for tax purposes. The pretax financial income for 2019 is $90,000. The tax rates are 30% for 2018 and 35% for 2019. By end of 2019, the government announced the change of tax rate for future periods. a. Prepare the journal entry to record income taxes for 2019.
- Your employer just purchased $218,000 of equipment that is classified as five-year MACRS property. The MACRS rates are .2, .32, .192, .1152, .1152, and .0576 for Years 1 to 6, respectively. What will be the book value of this equipment at the end of three years assuming no bonus depreciation is taken?A file server and peripherals are purchased in December by a calendar-year taxpayer for $8,000. The server will be used for 6 years and be worth $200 at that time. Calculate the depreciation deduction during years 1, 3, and 6. Use declining balance depreciation, switching to straight-line depreciation.A residential rental apartment complex is placed in service by a calendar-year taxpayer on February 27 for $530,000. The apartments are kept for slightly more than 6 years and sold on March 6. a. What is the MACRS-GDS property class? b. Determine the depreciation deduction during each of the 7 yearsinvolved. c. Determine the unrecovered investment during each of the 7 yearsinvolved.
