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 off

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 off

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter3: Business Income And Expenses

Section: Chapter Questions

Problem 12MCQ

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Similar questions

Which of the following items should be accounted for as a capital expenditure?a. The monthly rental cost of an office buildingb. Costs incurred to repair leaks in a building’s roofc. Maintenance fees paid with funds provided by the company’s capitald. Taxes paid in conjunction with the purchase of office equipment
Which of the following would be considered capital expenditures (debit to an asset)? Sales tax on the purchase of equipment Purchase of cleaning supplies to clean the company's microwave A special concrete foundation that was poured specifically for a new piece of equipment Installation costs for installing a new piece of equipment General maintenance costs for a piece of equipment that has been in service for ten years Routine oil change for a van Repair of damage incurred on a new piece of equipment while the new equipment was being brought into the company's office Attorney's fees incurred to review the purchase agreement for a new piece of equipment Installation of a parking lot around a retail buildling Freight costs for the delivery of a purchased used printing press
Which of the following statements is (are) correct?a. Accumulated depreciation represents a cash fund beingaccumulated for the replacement of plant assets.b. The cost of a machine includes the cost of repairingdamage to the machine during the installation process.c. A company may use different depreciation methods inits financial statements and its income tax return.d. The use of an accelerated depreciation method causesan asset to wear out more quickly than does use of thestraight-line method.
Identify the following costs that could be capitalized on the firm’s balance sheet (included in property, plant, and equipment). New windshield wiper blades on the company’s truck New sidewalks in front of the firm’s factory Freight expenses for new equipment installed in the factory Installation costs for the new equipment Realtor’s fees associated with land purchase Minor engine repair on the truck Engine replacement on the truck Razing or demolishing a building on newly acquired land Design costs for a new building Value-added tax Construction expenses associated with building a garage Costs required to bring the equipment to its intended location Administration and other general overhead costs Idle capacity Wasted materials, labour and other resources
Which of the following is NOT a capital expenditure? Fire insurance premium on a new building Architect's fees for a new building Expenditure incurred in the construction of parking space for staff Costs incurred in transporting newly purchases machinery
To what extent do you consider the following items to be proper costs of the fixed asset? Give reasons for your opinions. a. Overhead of a business that builds its own equipment. b. Cash discounts on purchases of equipment. c. Interest paid during construction of a building. d. Cost of a safety device installed on a machine. e. Freight on equipment returned before installation, for replacement by other equipment of greater capacity. f. Cost of moving machinery to a new location. g. Cost of plywood partitions erected as part of the remodeling of the office. h. Replastering of a section of the building. i. Cost of a new motor for one of the trucks.
The following expenditures were incurred in connection with a new machine acquired by a metals manufacturing company.Identify those that should be included in the cost of the asset.(a) Freight charges, (b) sales tax on the machine, (c) payment to a passing motorist whosecar was damaged by the equipment used in unloading the machine, (d) wages of employees for time spent in installing and testing the machine before it was placed in service, (e) wages of employees assigned to lubricate and makeminor adjustments to the machine one year after it was placed in service
Explain what impact these errors would have hadover the last year and how you will correct them so you can prepare accurate financial statements.Expenditures:• Normal repair and maintenance on the manufacturing facility were capitalized.• The cost of taxes on new equipment used in business operations was expensed.• The shipping costs on new equipment used in business operations were expensed.• The cost of a minor repair on existing equipment used in business operations was capitalized.Assets:• Land next to the production facility held for use next year as a place to build a warehouse wasdepreciated.• Land held for future resale when the value increases was classified as Property, Plant, andEquipment but not depreciated.• Equipment used in the production process was classified as an investment.
The following are capital expenditures EXCEPT the decoration of office space installation of an air conditioning system O fire insurance on a building renovation of office space
Some of the following items should be treated as capital and some as revenue. Carriage paid to bring the purchased machinery to the works. Complete redecoration of the premises at a cost of Kshs.150,000. A quarterly account for heating. The purchase of a soft drinks vending machine for the canteen with a stock of soft drinks. Wages paid by a building contractor to his own workmen for the erection of an office in the builder's stockyard. Required: For each item, give an appropriate classification. Give justification for each classification.
The IRS rule for capitalizing a purchase is if it is over $2,500. But this is not necessarily the guideline a company wants to establish. Capital assets are recorded in a “capital asset ledger” with the date of purchase, cost, depreciation method, useful life, salvage value and accumulated depreciation. Think of how a staff accountant, would write policy for a company in what type of expenditures should be capitalized and depreciated versus expensed. . Does it matter what type of company it is? How would this policy affect the balance sheet and the fixed asset ratio?
I compute the math as directed. First I take the initial cost of the land and add it to the short-term note. Then, I add the legal fees, delinquent taxes, and demolition costs of the building. I then deduct the amount received from selling the salvage materials. I don't include the cost paid to the contractor. That cost is assigned to the new warehouse. The answers I keep coming up with says incorrect.