Lelak Company was formed on January 1, year 2. Its machinery is being depreciated using the MACRS for income tax reporting and the straight-line method for financial statement reporting. Information concerning depreciation amounts under each method is as follows: Year Year 2 Year 3 MACRS $600,000 800,000 Straight-line method O $30,000 O $150,000 O $210,000 O $90,000 $400,000 View Policies 500,000 Assuming that the enacted income tax rate is 30% for all affected years, the amount of deferred taxes charged to expense in Lelak's year 3 income statement should be

Lelak Company was formed on January 1, year 2. Its machinery is being depreciated using the MACRS for income tax reporting and the straight-line method for financial statement reporting. Information concerning depreciation amounts under each method is as follows: Year Year 2 Year 3 MACRS $600,000 800,000 Straight-line method O $30,000 O $150,000 O $210,000 O $90,000 $400,000 View Policies 500,000 Assuming that the enacted income tax rate is 30% for all affected years, the amount of deferred taxes charged to expense in Lelak's year 3 income statement should be

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 5RE: Turnip Company purchased an asset at a cost of 10,000 with a 10-year life during the current year....

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Cox Construction, a company in its 10th year of business, purchased a piece of equipment on April 1, year 9, for 20,000. Cox has used it for business purposes since the initial purchase date. The company depreciated the equipment using the MACRS half-year table for 5-year assets. For tax purposes, what is the amount of accumulated depreciation expense for the equipment as of December 31, year 10? a. 6,000 b. 10,400 c. 11,600 d. 12,800
Turnip Company purchased an asset at a cost of 10,000 with a 10-year life during the current year. Turnip uses differing depreciation methods for financial reporting and income tax purposes. The depreciation expense during the current year for financial reporting is 1,000 and for income tax purposes is 2,000. Turnip is subject to a 30% enacted future tax rate. Prepare a schedule to compute Turnips (a) ending future taxable amount, (b) ending deferred tax liability, and (c) change in deferred tax liability (deferred tax expense) for the current year.
Redbud began operations at the beginning of Year 1, and has one depreciable asset with an original cost of $200, acquired at the start of Year 1. Redbud uses straight-line depreciation over 5 years for financial reporting and MACRS (3-year asset). Information about carrying value and tax basis of the asset is found in the table below. Book Tax Year Depreciation Carrying value MACRS Tax basis 1 40 160 66 134 2 40 120 90 44 3 40 80 30 14 4 40 40 14 5 40 In Years 1 and 2, Redbud had a small amount of positive net income and positive taxable income. In Year 3, Redbud experienced a $2,000 loss for net income. Redbud is not in an industry that is eligible for the carryback option, so Redbud will carry the loss forward. Redbud’s tax rate is 20%. Requirements: Calculate the net operating loss for Year 3. Prepare the journal entry to record income taxes for Year 3. Assume that Redbud only expects to realize 60% of the tax carryforward in future years.…
Convers Corporation (calendar-year-end) acquired the following assets during the current tax year: (ignore §179 expense and bonus depreciation for this problem): (Use MACRS Table 1, Table2,and Table 5.) Date Placed Original Asset in Service Basis Machinery October 25 $ 94,000 Computer equipment February 3 $ 34,000 Used delivery truck* March 17 $ 47,000 Furniture April 22 $ 174,000 Total $ 349,000 *The delivery truck is not a luxury automobile. In addition to these assets, Convers installed new flooring (qualified improvement property) to its office building on May 12 at a cost of $540,000. Table 1 MACRS Half-Year Convention Depreciation Rate for Recovery Period 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year Year 1 33.33% 20.00% 14.29% 10.00% 5.00% 3.750% Year 2 44.45 32.00 24.49 18.00 9.50 7.219 Year 3 14.81 19.20 17.49 14.40 8.55 6.677 Year 4 7.41 11.52 12.49 11.52 7.70 6.177 Year 5 11.52 8.93 9.22 6.93 5.713…
Chaz Corporation has taxable income in 2022 of $312,600 for purposes of computing the $179 expense and acquired the following assets during the year: Asset Office furniture Computer equipment Delivery truck Qualified real property (MACRS, 15 year, 150% DB) Total Placed in Service September 12 February 10 August 21 September 30 Maximum total depreciation deduction What is the maximum total depreciation deduction that Chaz may deduct in 2022? (Use MACRS Table 1. Table 2. Table 3, Table 4 and Table 5.) Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Basis $ 786,000 936,000 74,000 1,505,000 $ 3,301,000 =
Chaz Corporation has taxable income in 2021 of $313,600 for purposes of computing the $179 expense and acquired the following assets during the year. Asset Office furniture Computer equipment Delivery truck Qualified improvement property Total Placed in Service September 12 February 10 August 21 September 30 Maximum total depreciation deduction Basis $ 796,000 946,000 84,000 1,515,000 $3,341,000 What is the maximum total depreciation deduction that Chaz may deduct in 2021? (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.)
Chaz Corporation has taxable income in 2023 of $1,312,000 for purposes of computing the $179 expense and acquired the following assets during the year: Asset Placed in Service September 12 Basis $ 780,000 Office furniture Computer equipment Delivery truck Qualified real property (MACRS, 15 year, 150% DB) Total February 10 August 21 September 30 930,000 68,000 1,500,000 $ 3,278,000 What is the maximum total depreciation deduction that Chaz may deduct in 2023? (Use MACRS Table 1, Table 2. Table 3, Table 4, and Table 5.) Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Answer is complete but not entirely correct. Maximum total depreciation deduction 394,000 x
Chaz Corporation has taxable income in 2023 of $1,312,450 for purposes of computing the $179 expense and acquired the following assets during the year: Asset Office furniture Computer equipment Delivery truck Qualified real property (MACRS, 15 year, 150% DB) Total Placed in Service September 12 February 10 August 21 September 30 Maximum total depreciation deduction What is the maximum total depreciation deduction that Chaz may deduct in 2023? (Use MACRS Table 1, Table 2, Table 3, Table 4, and Table 5.) Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Basis $ 798,000 948,000 86,000 1,517,000 $ 3,349,000 $3,349,000 X
Chaz Corporation has taxable income in 2023 of $1,312,000 for purposes of computing the §179 expense and acquired the following assets during the year: Asset Placed in Service Basis Office furniture September 12 $ 780,000 Computer equipment February 10 930,000 Delivery truck August 21 68,000 Qualified real property (MACRS, 15 year, 150% DB) September 30 1,500,000 Total $ 3,278,000 What is the maximum total depreciation deduction that Chaz may deduct in 2023?
Chaz Corporation has taxable income in 2022 of $314,200 for purposes of computing the §179 expense and acquired the following assets during the year: Asset Office furniture Computer equipment Delivery truck Qualified real property (MACRS, 15 year, 150% DB) Total Placed in Service September 12 February 10 August 21 September 30 Basis $ 802,000 952,000 90,000 1,521,000 $ 3,365,000 What is the maximum total depreciation deduction that Chaz may deduct in 2022? (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.)
A distribution center purchased an equipment for $100,000 and has depreciated the equipment using the MACRS depreciation schedule as a 7-year property. The operating income in year 2 was $200,000 and the expenses were $87,000. If the company is in the 40% income tax bracket. i) What is the depreciation in year 2? $ ii) What is the taxable income in year 2? $ iii) What is the tax in year 2? $ iv) What is the book value of the equipment after year 2? $
Chaz Corporation has taxable income in 2021 of $315,000 for purposes of computing the §179 expense and acquired the following assets during the year: Asset Placed in Service Basis Office furniture September 12 $ 810,000 Computer equipment February 10 960,000 Delivery truck August 21 98,000 Qualified improvement property September 30 1,529,000 Total $ 3,397,000 What is the maximum total depreciation deduction that Chaz may deduct in 2021? (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.)