This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20 percent of management time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory. What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) (Leave no answers blank. Enter zero if applicable.) Material: Mulch and packaging Material: Administrative supplies Salaries: Factory labor Salaries: Sales & advertising Salaries: Administration Property taxes: Factory Property taxes: Offices Depreciation: Factory Depreciation: Offices Total Inventory Costs $ Costs 990,000 29,000 1,330,000 720,000 830,000 780,000 440,000 1,200,000 350,000 Tax Inventory $ 0

This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20 percent of management time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory. What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) (Leave no answers blank. Enter zero if applicable.) Material: Mulch and packaging Material: Administrative supplies Salaries: Factory labor Salaries: Sales & advertising Salaries: Administration Property taxes: Factory Property taxes: Offices Depreciation: Factory Depreciation: Offices Total Inventory Costs $ Costs 990,000 29,000 1,330,000 720,000 830,000 780,000 440,000 1,200,000 350,000 Tax Inventory $ 0

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 77P: During the last five months of the year, Dwana opens a new Internet telecommunications business...

See similar textbooks

Similar questions

This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20 percent of management time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory. a. What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) Note: Leave no answers blank. Enter zero if applicable. Material: Mulch and packaging Material: Administrative supplies Salaries: Factory labor Salaries: Sales and advertising Salaries: Administration Property taxes: Factory Property taxes: Offices Depreciation: Factory Depreciation: Offices Total Inventory Costs…
This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20% of administration time, space, and expense are spent on the manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory. a. What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) Note: Leave no answers blank. Enter zero if applicable. Material Mulch and packaging Material: Administrative supplies Salaries: Factory labor Salaries: Sales & advertising Salaries: Administration Property taxes Factory Property taxes: Offices Depreciation Factory Depreciation Offices Total Inventory Costs $ Costs…
This year, Amber purchased a business that processes and packages landscape mulch. Approximately 20 percent of management time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber's accountant indicated that the business had processed 10 million bags of mulch, but only 1 million bags remained in the ending inventory What is Amber's tax basis in her ending inventory if the UNICAP rules are used to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) (Leave no answers blank. Enter zero if applicable.) Costs Tax Inventory Material: Mulch and packaging 710,000 Material: Administrative supplies 66,500 Salaries: Factory labor 1.360,000 430.000 Salaries: Sales & advertising Salaries: Administration 750,000 945,000 450,000 995,000 360,000 Property taxes: Factory…
In 2021, Wilma Way’s sole proprietorship, WW Bookstore, generated $135,000 net profit. In addition, Wilma recognized a $6,500 Section 1231 gain on the sale of business furniture. The business checking account earned $450 interest income. Required: A. Which of these income items are subject to self-employment tax? B. Compute Wilma’s 2021 self-employment tax, assuming Wilma has no other earned income. C. Compute Wilma's allowable QBI deduction, assuming $55,000 of W-2 wages and $110,000 unadjusted basis of tangible depreciable property. Further assume the overall taxable income limitation on QBI does not apply and Wilma’s overall taxable income is sufficiently high that the W-2 wage limitation applies. D. Compute the overall impact of the bookstore activity on Wilma’s 2021 taxable income.
Seved Help Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $560,000. Of this sum, $70,000 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 $70,000 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.) a. Present value b. Present value
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
Flowers Corp. has a tax rate of 25% in all years. Information relating to Year 10: During Year 10, Flowers decided to sell the Bulbs Division (Bulbs) of its business. Bulbs met the qualifications of a discontinued component in Year 10; however, the component was not expected to be sold until Year 11. Management estimates it will cost $108,000 to sell Bulbs and that Bulbs' has a current fair value of $870,000. In Year 10, Flowers incurred a pre-tax income of $467,000 while operating Bulbs. On December 31, Year 10, Bulbs' historical cost was $3,200,000 with associated accumulated depreciation of $2,400,000. Provide the adjusting entry to record any impairment of Bulbs in Year 10. If no entry is needed choose "No Entry" for the debit and credit and $0 for the amount. debit . credit . for the amount of $ In Year 10 on the Balance Sheet, Flowers will report for Bulbs' Book Value for the amount of $ EN y F prin Doc ens:
Delta Company manufactures drills and sells them to distributors. In its first year of operations, Delta manufactured 10,000 drills and incurred $50,000 in direct material costs and $80,000 in direct labor costs. In addition, Delta capitalized $30,000 indirect costs for books and $65,000 for tax under UNICAP. At the end of the year, Delta had 4,200 drills on hand. Compute Delta's CGS for tax purposes.
Ms. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $580,000. Of this sum, $68,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the company will need to treat this cost as a tax- deductible current expense or as a capital investment. In the latter case, the company could depreciate the $68,000 straight-line over five years. How will the tax authority's decision affect the after-tax cost of the kiln? The tax rate is 25%, and the opportunity cost of capital is 8%. Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. > Answer is complete but not entirely correct. PV Tax shield 15,741✔ After-tax cost is smaller 13,575X After-tax cost is larger Installation cost is expensed at the end of year 1 If installation cost is capitalized and depreciated over 5 years $ $ 33
Sid Slaw purchased a car three years ago that he used for both private and business purposes (he is a freelance journalist). Sid bought the vehicle for $40,000 and made an initial input tax claim of $4,173.91 out of the $5,218 GST paid. After a year, Sid realised he had overestimated his business use proportion and made an output tax adjustment of $2,086.95. Sid has just sold the car for $12,000. Calculate the net amount of GST Sid should return to the IRD upon sale of the car?
Papa Corporation owns 85% of Bambina Company. Papa sold Bambina goods for $180,000 over the last year. The goods cost Papa $120,000. The tax rate is 40%, and by the end of the year 1/3 of the goods are still in Bambina inventory. If Papa and Bambina file separate income tax returns, what deferred income tax is created?
Juan Dela Cruz is the owner-manager of JDC Trading Company. Total Sales generated during the year amounted to P 1,230,000. Cost of goods sold is P 492,000 and total operating expenses is 184,500. The company opted for itemized deduction. Compute the gross taxable compensation income and tax due on each given situations: Juan Dela Cruz is single with no qualified dependent Juan Dela Cruz is single with 1 qualified dependent; JDC received creditable income tax withheld from its customers at P 27,655.