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Which of the following expenses is deductible as an entertainment expense?
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- The following would be non-deductible capital expenditure: (a.) The investment banker fees incurred in a hostile take-over (b.) The cost of fixing a leaky copper pipe in an office building. (c.) The cost of removing asbestos and re-insulating an entire office building (d.) The cost of paper supplies used in a law office.Taxes deducted from an employee's earnings to finance social security and medicare benefits are called FICA taxes. ____ 2. For an interest bearing note payable, the amount borrowed is equal to the face value of the note. ____ 3. Any costs incurred that are necessary to correct mistakes made during the installation of a new piece of equipment should be added to the cost of that asset. ____ 4. The only depreciation method that is acceptable when submitting tax returns to the IRS is the MACRS method. ____ 5. When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account. True and false questions....Taxes deducted from an employee's earnings to finance social security and medicare benefits are called FICA taxes. ____ 2. For an interest bearing note payable, the amount borrowed is equal to the face value of the note. ____ 3. Any costs incurred that are necessary to correct mistakes made during the installation of a new piece of equipment should be added to the cost of that asset. ____ 4. The only depreciation method that is acceptable when submitting tax returns to the IRS is the MACRS method. ____ 5. When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account.
- Assume that Sohar Aluminium Company purchased a machinery for OMR 2000 and spent OMR200 for its transportation. In addition they paid tax OMR 450 during purchase, Transportation cost OMR 100, Insurance during transportation OMR 50, and Assembling charges OMR 100, installation and testing charges OMR 250. After transportation and installation, the company also paid the insurance premium of OMR 50 to cover the future loss from the machinery due to accidents and breakdowns. Compute the cost of the machinery. a. None of the given options b. OMR3200 c. OMR3100 d. OMR3150Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $464,000. Of this sum, $58,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Service (IRS) will permit the company to treat this cost as a tax-deductible current expense or as a capital investment. In the latter case, the company could depreciate the $58,000 straight-line over 5 years. The tax rate is 30% and the opportunity cost of capital is 5%. a. What is the present value of the cost of the kiln if the installation cost is treated as a separate current expense?b. What is the present value of the cost of the kiln if the installation cost is treated as a part of the capital investment?Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $704,000. Of this sum, $88,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Service (IRS) will permit the company to treat this cost as a tax-deductible current expense or as a capital investment. In the latter case, the company could depreciate the $88,000 straight-line over 5 years. The tax rate is 30% and the opportunity cost of capital is 5%. a. What is the present value of the cost of the kiln if the installation cost is treated as a separate current expense? b. What is the present value of the cost of the kiln if the installation cost is treated as a part of the capital investment? Give typing answer with explanation and conclusion
- Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $496,000. Of this sum, $62,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Service (IRS) will permit the company to treat this cost as a tax-deductible current expense or as a capital investment. In the latter case, the company could depreciate the $62,000 straight-line over 5 years. The tax rate is 30% and the opportunity cost of capital is 5%. a. What is the present value of the cost of the kiln if the installation cost is treated as a separate current expense?b. What is the present value of the cost of the kiln if the installation cost is treated as a part of the capital investment? (Round your answer to the nearest whole dollar amount.)Which of the following are subjected to Value Added Tax (VAT)? A Sale by a real estate dealer of residential lot with a selling price or P800,000. B Sale by a real estate dealer of residential lot with a selling price of P3,500,000. C Sale by a real estate dealer of commercial lot with a selling price of P2,800,000. D Sale of residential lot classified as capital asset. E Sale by a real estate dealer of residential house and lot with a selling price of P3,000,000 F Sale by a real estate dealer of condominium unit with a selling price of P3,250,000 G Sale by a real estate dealer of parking lot in a condominium unit with a selling price of P850,000. H Sale of residential house and lot classified as capital asset with a selling price of P8,000,000.A. blue ocean associate is looking to generate income from extra cash. The company purchased an old building, will be restored and sold at a profit. how should blue ocean classify the building on its book? B. And if blue ocean had bought a lanf for the site of a new office, what depreciation method would you, as its newly hired accountant, suggest it uses for the land?
- Which of the following taxpayers may not use the standard mileage method of calculating transportation costs? a.A self-employed CPA who drives a computer-equipped minivan to visit clients. b.An attorney who uses his Tesla for calling on clients. c.A taxpayer who has a fleet of 10 business automobiles. d.A real estate salesperson who drives a $70,000 Mercedes while showing houses. e.All of these taxpayers may use the standard mileage method.John Smith mistakenly expensed the cost of a long-term tangible fixed asset. Specifically, he charged the cost of a truck to a delivery expense account. How will this error affect the income statement and the balance sheet in the year in which the mistake is made?Further, Nick incurred additional expenses in relation to his rental properties as follows: Expense ($) Repairs to the roof of the rental property following a severe storm 6,000 Replacement of the central air conditioning system in the rental property 5,000 Based on the above facts and relevant tax laws, how should you treat the following expenses? A Fully deduct the air conditioning system related costs while only claiming the decline in value of the roof according to its effective life. B Fully deduct the roof related costs while only claiming the decline in value of the air conditioning system according to its effective life. C Include the full amount of $11,000 as repairs and maintenance expense D As they are both very expensive items, they are capital in nature and only the decline in value according to its effective life for both items can be claimed.