If an entity that uses a calendar year period and reports on an annual basis changes its business model for managing financial assets on November 1, 20x1, any reclassification entry is made on a. January 1, 20x1 b. January 1, 20x2 c. November 1, 20x1 d. Any of these

If an entity that uses a calendar year period and reports on an annual basis changes its business model for managing financial assets on November 1, 20x1, any reclassification entry is made on a. January 1, 20x1 b. January 1, 20x2 c. November 1, 20x1 d. Any of these

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter12: Corporations: Organization, Capital Structure, And Operating Rules

Section: Chapter Questions

Problem 41P

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On December 31, 2019, Vail Company owned the following assets: Vail computes depreciation and amortization expense to the nearest whole year. During 2020, Vail engaged in the following transactions: Required: 1. Check the accuracy of the accumulated depreciation balances at December 31, 2019. Round to the nearest whole dollar in all requirements. 2. Prepare journal entries to record the preceding events in 2020, as well as the year-end recording of depreciation expense. 3. Prepare an Accumulated Depreciation account for each category of assets, enter the beginning balance, post the journal entries from Requirement 2, and compute the ending balance.
Ross Company is a C corporation providing property management services. Ross has used the cash method since inception because its gross receipts did not exceed $26,000,000. This year its average annual gross receipts for the prior three years crossed the $26,000,000 mark, requiring Ross to change from the cash method to the accrual method. At the end of its prior year, Ross had accounts receivable of $850,000 and accounts payable of $540,000. Compute and explain the adjustment to taxable income that Ross must make due to the change in accounting method. When must Ross include this adjustment in its income?
DRS Corporation changed the way it depreciates its computers from the sum-of-the-year’s-digits method to thestraight-line method beginning January 1, 2018. DRS also changed its estimated residual value used in computingdepreciation for its office building. At the end of 2018, DRS changed the specific subsidiaries constituting thegroup of companies for which its consolidated financial statements are prepared.Required:1. For each accounting change DRS undertook, indicate the type of change and how DRS should report thechange. Be specific.2. Why should companies disclose changes in accounting principles?
1. For interim reporting, a loss on disposal of land occurring in the third quarter is a. Recognized and allocated over the quarters b. Recognized and allocated over four quarters c. Recognized immediately in the third quarter d. Deferred until the annual reporting 2. For interim financial reporting, a company's income tax provision for the second quarter of 2022 should be determined using a. Effective tax rate expected to be applicable for the full year of 2022 as estimated at the end of the first quarter of 2022 b. Effective tax rate expected to be applicable for the full year of 2022 as estimated at the end of the second quarter of 2022. c. Effective tax rate expected to the applicable for the second quarter of 2022 d. Statutory tax rate for 2022
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