PRINCIPLES OF TAXATION F/BUS.+INVEST.
22nd Edition
ISBN: 9781259917097
Author: Jones
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 4, Problem 6AP
a.
To determine
Determine the after-tax cash from the contract in the given situation.
b.
To determine
Determine the after-tax cash from the contract in the given situation.
c.
To determine
Determine the after-tax cash from the contract in the given situation.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Company G, which has a 30 percent marginal tax rate, owns a controlling interest in Company J, which has a 12 percent marginal tax rate. Both companies perform engineering services. Company G is negotiating a contract to provide services for a client. Upon satisfactory completion of the services, the client will pay $100,000 cash.
Required:
Compute the after-tax cash from the contract assuming that Company G is the party to the contract and provides the services to the client.
Compute the after-tax cash from the contract assuming that Company J is the party to the contract and provides the services to the client.
Compute the after-tax cash flow for Company G from the contract assuming that Company J is the party to the contract, but Company G actually provides the services to the client.
Zentric Garage Inc. enters into a contract to provide services totaling $78,000. The contract includes a potential performance bonus
based on when Zentric Garage completes the services. Zentric Garage estimates the following scenarios for completion.
(Click the icon to view the scenarios.)
Determine the bonus using the most-likely-amount approach.
Determine the bonus using the most-likely-amount approach under scenario 1.
The bonus for this contract using the most-likely-amount approach under scenario 1 is $
Determine the bonus using the most-likely-amount approach under scenario 2.
The bonus for this contract using the most-likely-amount approach under scenario 2 is $
Determine the bonus using the most-likely-amount approach under scenario 3.
The bonus for this contract using the most-likely-amount approach under scenario 3 is $
Ente
Scenarios
Complete within
3 days
5 days
8 days
Probability
Bonus Scenario 1 Scenario 2
80%
47%
15%
38%
5%
15%
$ 13,000
$ 8,000
$ 3,500
Print Done…
George Co. enters into a contract to build an apartment for Jungle Co. For a fixed fee of P20,000,000. At contract inception, George Co. assesses its performance obligations in the contract and concludes that it has a single performance obligation that is satisfied over time. George Co. determines that the measure of progress that best depicts its performance in the contract is input method based on costs incurred. George estimates that the total contract costs would amount to P16,000.000 over the construction period. George incurs contract costs of P2,000,000 during the year.
How much revenue is recognized for the year?
Chapter 4 Solutions
PRINCIPLES OF TAXATION F/BUS.+INVEST.
Ch. 4 - Prob. 1QPDCh. 4 - Mrs. K is about to begin a new business activity...Ch. 4 - Prob. 3QPDCh. 4 - On the basis of the discussion in this chapter and...Ch. 4 - Prob. 5QPDCh. 4 - Why do income shifts and deduction shifts usually...Ch. 4 - Prob. 7QPDCh. 4 - Prob. 8QPDCh. 4 - Prob. 9QPDCh. 4 - Prob. 10QPD
Ch. 4 - Identify the reasons why managers should evaluate...Ch. 4 - Prob. 12QPDCh. 4 - Prob. 13QPDCh. 4 - Prob. 14QPDCh. 4 - Using the 2019 corporate tax rate: a. What are the...Ch. 4 - Ms. JK recently made a gift to her 19-year-old...Ch. 4 - Firm A has a 21 percent marginal tax rate, and...Ch. 4 - Prob. 6APCh. 4 - Prob. 7APCh. 4 - Firm M and Firm N are related parties. For the...Ch. 4 - Company K has a 30 percent marginal tax rate and...Ch. 4 - Firm H has the opportunity to engage in a...Ch. 4 - What is the effect on the NPV of the restructured...Ch. 4 - French Corporation wishes to hire Leslie as a...Ch. 4 - Corporation R signed a contract to undertake a...Ch. 4 - Prob. 14APCh. 4 - Lardo Inc. plans to build a new manufacturing...Ch. 4 - Prob. 16APCh. 4 - Prob. 17APCh. 4 - Prob. 18APCh. 4 - Prob. 19APCh. 4 - Prob. 20APCh. 4 - Refer to the facts in the preceding problem. At...Ch. 4 - For each of the following scenarios, indicate...Ch. 4 - Assume that Congress amends the tax law to provide...Ch. 4 - Firm L has 500,000 to invest and is considering...Ch. 4 - Prob. 1IRPCh. 4 - Mr. and Mrs. K own rental property that generates...Ch. 4 - Prob. 3IRPCh. 4 - Prob. 4IRPCh. 4 - Prob. 5IRPCh. 4 - Prob. 6IRPCh. 4 - Prob. 7IRPCh. 4 - Firm HR is about to implement an aggressive...Ch. 4 - Prob. 1TPCCh. 4 - Prob. 2TPCCh. 4 - Prob. 3TPCCh. 4 - Ms. Z has decided to invest 75,000 in state bonds....
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- In 20x1, ABC Co. enters into a contract to construct a building for a customer. ABC identifies its performance obligation to be satisfied over time. ABC measures its progress on the contract based on costs incurred. The contract price is P20,000,000. ABC has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows: 20x1 20x2 20x3 Contract costs incurred per year Billings per year Collections on billings per year 1,920,000 3,000,000 5,650,000 3,850,000 8,160,000 7,320,000 10,000,000 500,000 6600,000 Estimated costs to complete (at each year-end) from the Student Ha8,840,000 1,720,000 ons, quizzes rection with any academic work, abetting of the same: 1st violation How much profit is recognized on the contract in 20x3?arrow_forwardIn 20x1, ABC Co. enters into a contract to construct a building for a customer. ABC identifies its performance obligation to be satisfied over time. ABC measures its progress on the contract based on costs incurred. The contract price is P20,000,000. ABC has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows: 20x1 20x2 20x3 Contract costs incurred per year Billings per year Collections on billings per year Estimated costs to 8,160,000 7,320,000 1,920,000 10,000,000 7,000,000 3,000,000 9,500,000 6,650,000 3,850,000 complete (at each year-end) 8,840,000 1,720,000 How much profit is recognized on the contract in 20x3?arrow_forwardPROBLEMS 6-1. Mr. A is in trading business. On June 2, 2019, he purchased an office equipment with a useful life of three years for P950,000, VẬT not included. How much was the input tax 6-2. Mr. B, a VAT taxpayer, purchased on February 5, 2019 an office equipment for P1,500,000, VAT not included, with a useful life of ten months. How much was the input tax for February 2019? 3,00 6-9. 6-3. C Co. is a service provider. It purchased a fixed asset for P2,400,000, with a useful life of three years, VAT not included. Monthly input tax? 6-4. D Co. is in manufacturing business. It purchased a fixed asset on July 1, 2019 with a useful life of ten years for P2,100,000, VAT not included. How much was the monthly input tax? 6-5. E Co. purchased in March 2019, fixed assets: Asset No. 1 (useful life of 5 years) Asset No. 2 (useful life of 2 years) Input tax of March 2019? P550,000 400,000 6-6. G Co. purchased several fixed assets in a month: Asset No. 1 (useful life of 8 years) Asset No. 2 (useful…arrow_forward
- In 20x1, ABC Co. enters into a contract to construct a building for a customer. ABC identifies its performance obligation to be satisfied over time. ABC measures its progress on the contract based on costs incurred. The contract price is P20,000,000. ABC has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows: 20x1 20x2 Contract costs incurred per year Billings per year Collections on billings 20x3 8,160,000 7,320,000 1,920,000 10,000,000 7,000,000 3,000,000 9,500,000 6,650,000 3,850,000 per year Estimated costs to 1911 complete (at each year-end)er from the Student Ha8,840,000 of 1,720,000 "Cheating during examinations, quizzes or plagiarism in connection with any academic work, abetting of the same: 1st violation- How much profit is recognized on the contract in 20x3? suspension with invalidation of grade; 3rd violation- suspensionarrow_forwardAssume that AntonTech starts selling TechStop franchises. TrueTech charges. Franchisees an initial fee in exchange for (a) the exclusive right to operate the only TechStop in a particular area for a five-year period, (b) the equipment necessary to distribute and repair AntonTech products, and (c) training services to be provided over a two-year period. Similar equipment and training can be purchased elsewhere. 1. How many performance obligations exist in this contract? a. 0 b. 1 c. 2 d. 3 2. AntonTech should recognize revenue for the right to operate a Techshop? a. No transaction b. No revenue c. Point in time d. Over time 3. AntonTech should recognize revenue for the equipment? a. No transaction b. No revenue c. Point in Time d. Over Timearrow_forwardAn entity enters a contract with a customer and promises to grant a franchise license that provides the customer with the right to use the entity's trade name and sell the entity's product for ten years. The entity also promises to provide the equipment necessary to operate a franchise outlet. In exchange for granting the license, the entity receives a sales-based royalty of 5% of the customer's monthly sales. What is/are the performance obligation/s to be identified by the franchisor? a.Franchise license only b.Equipment license only c.Franchise license and equipment d.Right to use entity's trade name and sell the entity's productarrow_forward
- Jillian Inc. manufactures and installs customized equipment. On January 1, 2021, Jillian entered into a contract to sell equipment to a client for $800,000. This amount included installation. The company normally charges an additional fee for its installation services, but in this case, the installation was "bundled" with the equipment. The standalone value of the machinery was $750,000 while the cost of the installation was estimated at $100,000. Jillian had the equipment in its inventory on January 1, 2021. The equipment, which had a cost of $600,000, was customized (at no cost Jillan), and delivered to the client and installed on that date. Payment terms are as follows: January 1, 2021: $80,000 upon contract signing and delivery and installation. December 31, 2021; Balance due. Jillian Inc. follows IFRS and estimates that the interest rate for a similar financing arrangement would be 6%. Required: a. Apply the steps of IFRS 15 Revenue Recognition to this transaction. State each step…arrow_forwardTony Corporation has a construction contract in progress as follows : Total contract price: $550 million Costs incurred to date: $225 million Estimated cost to completion: $340 million Payments invoiced & received: $290 million Question : Calculate the amount that can be recognized in the income statement and statement of financial position with assumes performance obligation is satisfied. Please use these items in answering the question: 1. Income Statement: Revenue, Cost of Sales, Gain/Loss. 2. Statement of Financial Position: Cost incurred to date, Recognized Gain/Loss, Receivable/Payable, Contract Asset/Liability.arrow_forwardThe Naples Company uses the percentage-of-completion method and the cost-to-cost method for its long-te construction contracts. On one such contract, Naples expects total revenues of 260,000 and total costs of 200,000. During the first year, Naples incurred costs of 50,000 and billed the customer 30,000 under the contract. At what net amount should Naple's Construction in Progress for this contract be reported at the end of the first year?arrow_forward
- P22,000,000. Dawn Co. incurred the following costs: from the contract. The estimated total contract costs were. 14. Dawn Co. was contracted to build a house for a customer. The contract price was P25,000,000. Dawn Co. uses the percentage antract price was P25,000,000, Dawn Co. uses the percentage of completion method, based on costs, in recognizing revenue from the contract. The estimated total contract costs were. P22,000,000. Dawn Co. incurred the following costs: 20x1 20x2 Costs incurred to date 3,960,000 18,400,000 In 20x2, the customer changed the specification of the window glasses to tempered glass and agreed to pay an additional 5% of the original contract price. The incremental cost was estimated to be P1,000,000. The performance obligation in the contract remains a single performance obligation. How much are the revenue and gross profit recognized in 20x2, respectively? a. 12,060,000; 2,068,000 c. 16,800,000; 2,068,000 d. 16,500,000; 2,060,000 b. 14,268,000; 2,060,000arrow_forwardAccording to the ideas behind the revenue recognition standard of the FASB, when a seller enters into a contract with a buyer, the seller accepts certain performance obligations in exchange for the promise of receiving assets from the buyer. Under this standard, when does the seller RECOGNIZE REVENUE? When the seller enters into a contract with the buyer When the seller satisfies a performance obligation to the buyer When the seller spends 50 percent or more of the cash needed to serve the buyer When the seller collects cash from the buyerarrow_forwardOn January 1, 2020, Gordon Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $3,000. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Gordon identifies two performance obligations and allocates $1,200 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $700; the shelves have a cost of $320. Instructions a. Prepare the journal entry on January 1, 2020, for Gordon. b. Prepare the journal entry on February 5, 2020, for Gordon when the wiring base is delivered to the customer. c. Prepare the journal entry on February 25, 2020, for Gordon when the shelving unit is delivered to the customer and Gordon receives full payment.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