Calculate taxable income
• LO16–1, LO16–4
Shannon Polymers uses straight-line
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INT. ACCOUNTING<CUSTOM>W/CONNECT 2-YEA
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FINANCIAL ACCT.FUND.(LOOSELEAF)
- Exercise 13-37 (LO. 7) On June 5, 2020, Brown, Inc., a calendar year taxpayer, receives cash of $750,000 from the county upon condemnation of its warehouse building (adjusted basis of $500,000 and fair market value of $750,000). Complete the statements below regarding what must Brown do to qualify for § 1033 postponement if the adjusted basis was instead $795,000. Because Brown has a realized loss on the condemnation of business property, it is automatically recognized . In this case, §1033 does not modify the normal rules of recognition. Therefore, Brown has a realized loss of $fill in the blank of which $fill in the blank is recognized. Feedbackarrow_forward[8:50 PM, 2/23/2022] Veron Walker Uwi: Grace Corporation's pretax financial income is $600,000 and taxable income is $550,000 for year 2020.Its beginning deferred tax liability account has a balance of $75,000. Its cumulative temporarydifferences for year-end 2020 is equal to $300,000 and will reverse and result in taxable amounts as follows: Year Taxable Amount2021 $100,0002022 $ 75,0002023 $125,000The tax rate is 30% for all years.[8:50 PM, 2/23/2022] Veron Walker Uwi: Required:(i) Calculate the taxes payable for the year 2020(ii) Calculate the deferred tax liability for the year 2020(iii) Calculate the total tax expense for 2020(iv) Prepare the journal entry to record the tax expense for 2020(v) Prepare the income statement presentation of the tax amounarrow_forwardProblem 10-61 (LO 10-2, LO 10-3) (Algo) Chaz Corporation has taxable income in 2020 of $361,000 for purposes of computing the §179 expense and acquired the following assets during the year: Placed in Asset Service Basis Office furniture September 12 $ 761,000 Computer equipment February 10 920,000 Delivery truck August 21 60,000 Qualified improvement property September 30 1,521,000 Total $ 3,262,000 What is the maximum total depreciation deduction that Chaz may deduct in 2020? (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Round your intermediate calculations and final answer to the nearest whole dollar amount.)arrow_forward
- P10.1 (LO 1 ) (Classification of Acquisition and Other Asset Costs) At December 31, 2019, certain accounts included in the property, plant, and equipment section of Reagan Company's balance sheet had the following balances. Land $230,000 Buildings 890,000 Leasehold improvements 660,000 Equipment 875,000 During 2020, the following transactions occurred. 1.Land site number 621 was acquired for $850,000. In addition, to acquire the land Reagan paid a $51,000 commission to a real estate agent. Costs of $35,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $13,000. 2.A second tract of land (site number 622) with a building was acquired for $420,000. The closing statement indicated that the land value was $300,000 and the building value was $120,000. Shortly after acquisition, the building was demolished at a cost of $41,000. A new building was constructed for $330,000 plus the…arrow_forwardIntermediate Accounting ll ch 16 7. At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $25 million attributable to a temporary book-tax difference of $100 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $64 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2024 is $180 million and the tax rate is 25%. Required: Prepare the journal entry(s) to record Payne’s income taxes for 2024, assuming it is more likely than not that the deferred tax asset will be realized in full. Prepare the journal entry(s) to record Payne’s income taxes for 2024, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized. Required 1 Record 2024 income taxes Transaction General Journal Debit Credit 1 Record…arrow_forwardIntermediate Accounting ll ch 16 5. On January 1, 2021, Ameen Company purchased major pieces of manufacturing equipment for a total of $48 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2023, the book value of the equipment was $42 million and its tax basis was $32 million. At December 31, 2024, the book value of the equipment was $40 million and its tax basis was $25 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $30 million. Required: Prepare the appropriate journal entry to record Ameen’s 2024 income taxes. Assume an income tax rate of 25%. What is Ameen’s 2024 net income?arrow_forward
- CA10.3 (LO 2) (Capitalization of Interest) Vania Magazines started construction of a warehouse building for its own use at an estimated cost of $5,000,000 on January 1, 2019, and completed the building on December 31, 2019. During the construction period, Vania has the following debt obligations outstanding. Construction loan—12% interest, payable semiannually, issued December 31, 2018 $2,000,000 Short-term loan—10% interest, payable monthly, and principal payable at maturity, on May 30, 2020 1,400,000 Long-term loan—11% interest, payable on January 1 of each year; principal payable on January 1, 2022 1,000,000 Total cost amounted to $5,200,000, and the weighted average of accumulated expenditures was $3,500,000. Jane Esplanade, the president of the company, has been shown the costs associated with this construction project and capitalized on the balance sheet. She is bothered by the “avoidable interest” included in the cost. She argues that, first, all the…arrow_forwardBE 19.12 Rode inc. incurred a net operating loss of $500,000 in 2020. The tax rate for all years is 20%. Prepare the journal entries to record the benefits of the loss carryforward. Rode expects to return to profitability in 2020. BE 19.13 Use the information for Rode Inc. given in BE 19.12. Assume that it is more likely than not that the entire net operating loss carryforward will not be realized in future years. Prepare all the journal entries necessary at the end of 2020. Deferred Tax Asset $0 x .0................................$ Income Tax Expense (Loss Carryforward).....................$ Income Tax Expense (Allowance)......................$ Allowance to Reduce Deferred Tax Asset to expected realizable Value...........................................$arrow_forward4. A company establishes a depreciation account for an asset that is classified as Sec.1245property. The account is based on the MACRS with a life of seven years and an initial cost of$100,000. Without considerable of the sale of this asset, the company's taxable income is$400,000. Determine the following if the asset is sold after 5 years: a. The federal tax liability if the asset is sold for$15,000. b. The federal tax liability if the asset is sold for$160,000. c. The federal tax liability if the asset is sold for$90,000.arrow_forward
- Exercise 8-19 (LO. 2) Euclid acquires a 7-year class asset on May 9, 2020, for $80,000 (the only asset acquired during the year). Euclid does not elect immediate expensing under § 179. He does not claim any available additional first-year depreciation. Click here to access the depreciation table to use for this problem. If required, round your answers to the nearest dollar. Calculate Euclid's cost recovery deduction for 2020 and 2021.2020: $2021: $ 8-7cCost Recovery Tables Summary of Tables Exhibit 8.3 Regular MACRS table for personalty. Depreciation methods: 200 or 150 percent declining-balance switching to straight-line. Recovery periods: 3, 5, 7, 10, 15, 20 years. Convention: half-year. Exhibit 8.4 Regular MACRS table for personalty. Depreciation method: 200 percent declining-balance switching to straight-line. Recovery periods: 3, 5, 7 years. Convention: mid-quarter. Exhibit 8.5 MACRS optional straight-line table for personalty.…arrow_forwardQ10.9 During 2020, Sunland Company incurred weighted-average accumulated expenditures of $1570000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2020 was a $2040000, 9%, 5-year note payable dated January 1, 2020. What is the amount of interest that should be capitalized by Sunland during 2020? $0. $42300. $183600. $141300.arrow_forwardBE19.2 (LO 1) Oxford Corporation began operations in 2020 and reported pretax financial income of $225,000 for the year. Oxford's tax depreciation exceeded its book depreciation by $40,000. Oxford's tax rate for 2020 and years thereafter is 30%. In its December 31, 2020, balance sheet, what amount of deferred tax liability should be reported? BE19.3 (LO 1, 2) Using the information from BE19.2, assume this is the only difference between Oxford's pretax financial income and taxable income. Prepare the journal entry to record the income tax expense, deferred income taxes, and income taxes payable, and show how the deferred tax liability will be classified on the December 31, 2020, balance sheet.arrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT