CengageNOWv2, 1 term Printed Access Card for Hoffman/Young/Raabe/Maloney/Nellen's South-Western Federal Taxation 2018: Individual Income Taxes, 41st
41st Edition
ISBN: 9781337389518
Author: William H. Hoffman, James C. Young, William A. Raabe, David M. Maloney, Annette Nellen
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 53P
To determine
Compose a letter to M and present the computations of cost recovery and amortization during the first year. Also, prepare a memo to M for tax files.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Hoot Enterprises buys a warehouse for $590,000 to use for its East Coast distributionoperations. On the date of the purchase, a professional appraisal shows a value of $650,000for the warehouse. The seller had originally purchased the building for $480,000. Hoothas a similar warehouse on the West Coast that has a book value of $603,000. Under thehistorical cost principle, Hoot should record the building fora. $650,000.b. $480,000.c. $590,000.d. $603,000.
In a cost center, the manager has responsibility and authority for making decisions that affect
a. costs
b. investments in assets
c. both costs and revenues
d. revenues
Keating Co. is considering disposing of equipment with a cost of $68,000 and accumulated depreciation of $47,600. Keating Co. can sell the equipment through a broker for $27,000 less 8% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $46,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is
a. $11,160
b. $7,812
c. $16,740
d. $13,392
If sales are $828,000, variable costs are 68% of sales, and operating income is $278,000, what is the contribution margin ratio?
a. 64%
b. 36%
c. 68%
d. 32%
A company is considering purchasing a parcel of land that was originally acquired by the seller for $85,000. While the land is currently offered for sale at
$150,000, it is considered by the purchaser as easily being worth $140,000, and is finally purchased for $137,000, the land should be recorded in the
purchaser's books at:
Chapter 8 Solutions
CengageNOWv2, 1 term Printed Access Card for Hoffman/Young/Raabe/Maloney/Nellen's South-Western Federal Taxation 2018: Individual Income Taxes, 41st
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQCh. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - LO.2 Robert purchased and placed in service...Ch. 8 - LO.2 Jim owns a very large ranch. A large part of...Ch. 8 - Prob. 10DQ
Ch. 8 - Prob. 12DQCh. 8 - Discuss the definition of business income as it is...Ch. 8 - Prob. 14DQCh. 8 - Prob. 15DQCh. 8 - Prob. 16DQCh. 8 - Prob. 17DQCh. 8 - Prob. 18DQCh. 8 - Prob. 19DQCh. 8 - Prob. 20DQCh. 8 - Prob. 21CECh. 8 - Prob. 22CECh. 8 - Prob. 23CECh. 8 - Prob. 24CECh. 8 - Prob. 25CECh. 8 - Prob. 26CECh. 8 - Prob. 27CECh. 8 - Prob. 28CECh. 8 - Prob. 29CECh. 8 - Prob. 30CECh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 39PCh. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 42PCh. 8 - Prob. 43PCh. 8 - Prob. 44PCh. 8 - Prob. 45PCh. 8 - Prob. 46PCh. 8 - Prob. 47PCh. 8 - Prob. 48PCh. 8 - Prob. 49PCh. 8 - Prob. 50PCh. 8 - Prob. 51PCh. 8 - LO.2, 5, 9 Jamie purchased 100,000 of new office...Ch. 8 - Prob. 53PCh. 8 - Prob. 54PCh. 8 - Prob. 55PCh. 8 - Prob. 56PCh. 8 - Prob. 57CPCh. 8 - Prob. 58CPCh. 8 - Prob. 1RPCh. 8 - Prob. 2RPCh. 8 - Prob. 3RPCh. 8 - Michael Sima, a sole proprietor craftsman,...Ch. 8 - Cox Construction, a company in its 10th year of...Ch. 8 - Stem Corp. bought a machine in February of year 7...Ch. 8 - Prob. 4CPACh. 8 - Data, Inc., purchased and placed in service a...Ch. 8 - Data, Inc., purchased and placed in service 5,000...Ch. 8 - Which statement below is correct? a. Real property...
Knowledge Booster
Similar questions
- FrostFrost Enterprises buys a warehouse for $ 530 comma 000$530,000 to use for its East Coast distribution operations. On the date of the purchase, a professional appraisal shows a value of $ 580 comma 000$580,000 for the warehouse. The seller had originally purchased the building for $ 520 comma 000$520,000. FrostFrost has a similar warehouse on the West Coast that has a book value of $ 544 comma 000$544,000. Under the historical cost principle, FrostFrost should record the building forarrow_forwardWanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $215,000. Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Problem 10-45 Part b (Algo) b. What would be Bob's basis in the warehouse and in the land if the appraised value of the warehouse was $87,500, and the appraised value of the land was $215,000? Warehouse Land Bob's Basisarrow_forwardV6. A company purchases land, building and equipment for $1,500,000. An independent appraisal shows that the best available indications of fair value at the time of purchase are: land: $760,000; building: $540,000; and equipment: $320,000. The purchase is financed through long-term debt. Required: Prepare the journal entry to record the purchase Prepare the journal entry to record the purchase:arrow_forward
- A building is offered for sale at $500,000 but is currently assessed at $400,000. The purchaser of the building believes the building is worth $475,000, but ultimately purchases the building for $450,000. The purchaser records the building at: a. $50,000. c. $450,000. e. $500,000. b. $400,000. d. $475,000.arrow_forwardPointer Company buys a piece of property in north Toronto that has the following costs associated with the purchase: Invoice price for land and building = $303,500 Legal fees associated with the purchase = $12,000 Unpaid property taxes assumed by Pointer as part of the purchase agreement = $28,000 Cost of having property professionally appraised = $10,350 The appraisal report shows the building has an appraised market value of $400,000 and the land has an appraised value of $100,000. Required 1: What amount should be capitalized as the value of the land on Pointer's book? $ Required 2: What amount should be capitalized as the value of the building on Pointer's book? $ Required 3: If the property acquired will be depreciated in 40 years with no residual value (assume the straight-line depreciation is used), what is the depreciation expense for the first full year of use? $arrow_forwardReynolds Construction (RC) needs a piece of equipment that costs $200. RC can either lease the equipment or borrow $200 from a local bank and buy the equipment. Reynolds's balance sheet prior to the acquisition of the equipment is as follows: Current assets: $300 Debt: $400 Net Fixed Assets: 500 Equity: 400 Total assets: 800 Total claims: 800 a. (1) What is RC's current debt ratio? (2) What would be the company's debt ratio if it purchased the equipment? (3) What would be the debt ratio if the equipment were leased and the lease was not capitalized? (4) What would be the debt ratio if the equipment were leased and the lease were capitlaized? Assume that the present value of the lease payments is equal to the cost of the equipment. b. Would the company's financial risk be different under the leasing and purchasing alternatives?arrow_forward
- Diana Company is now a growing company. An acquisition of land and construction of a new building was undertaken. The following information relates to the scenario: Land, at purchase price, P700,000 Legal fees related to land purchase, P45,000 Full construction cost of the new building, P5,780,000 Professional fees paid to the architect, P100,000 Sale of scrap materials from the old building previous situated in the land, P60,000 Demolition cost of old building for the construction of the new building, P90,000 How much is the cost of land? Cost of building? Note: is Sale of Scrap Materials from the old building previous situated in the land under “Land” or “Building” - why? If what is given is “sale of scrap from old building” - that is under “Land” cost or “Building” cost?arrow_forwardSubasta Corporation was able to acquire second hand goods worth P100,000 in an auction. The goods can be sold as is for P120,000 or reconditioned at a cost of P30,000 and sold for P170,000. 1. Identify the irrelevant cost in this problem. Why? 2. Which alternative should be chosen: sell as is or recondition. Why? 3. What is the opportunity cost of reconditioning the goods. Why?arrow_forwardDon Company has recently purchased a computer system for its office. The following information was gathered in relation to the acquisition of the unit: List price- P304,000 Trade discount and rebates taken- P112,000 Installation and assembly cost- P6,400 Initial delivery and handling cost- P12,800 Purchase discount- 2% What is the acquisition cost of the new computer?arrow_forward
- Diana Company is now a growing company. An acquisition of land and construction of a new building was undertaken. The following information relates to the scenario: Land, at purchase price, P700,000 Legal fees related to land purchase, P45,000 Full construction cost of the new building, P5,780,000 Professional fees paid to the architect, P100,000 Sale of scrap materials from the old building previous situated in the land, P60,000 Demolition cost of old building for the construction of the new building, P90,000 How much is the cost of land? Cost of building?arrow_forwardSanta Rosa recently purchased a new boat to help ship product overseas. The following information is related to that purchase: • Purchase price $4,500,000 • Cost to bring boat to production facility $25,000 • Yearly insurance cost $25,000 Annual maintenance cost of $37,000 • Received 8% discount on sales price A. Determine the acquisition cost of the boat. B. Record the journal entry needed. If an amount box does not require an entry, leave it blank. 10arrow_forward1. Cala Manufacturing purchases a large lot onwhich an old building is located as part of its plans to build a new plant.The negotiated purchase price is $269,000 for the lot plus $164,000 for theold building. The company pays $26,200 to tear down the old building and$38,730 to fill and level the lot. It also pays a total of $1,545,568 inconstruction costs—this amount consists of $1,453,800 for the new buildingand $91,768 for lighting and paving a parking area next to the building. Prepare a single journal entry to recordthese costs incurred by Cala, all of which are paid in cash. Liltua Company pays$385,000 for real estate plus $20,405 in closing costs. The real estateconsists of land appraised at $214,200; land improvements appraised at$102,000; and a building appraised at $193,800. 2.Allocate the totalcost among the three purchased assets.(Round your “Apportioned Cost” answers to 2decimal places.) rev:11_26_2013_QC_41255 3.Prepare the journal entry to record the purchase.(Round…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT