Concepts in Federal Taxation 2019 (with Intuit ProConnect Tax Online 2017 and RIA Checkpoint 1 term (6 months) Printed Access Card)
26th Edition
ISBN: 9781337702621
Author: Kevin E. Murphy, Mark Higgins
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 39P
To determine
Find out whether the expense is currently deductible or should be capitalized.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
A company purchased a new forging machine to manufacture disks for airplane turbine engines. The new press costs $3,800,000, and it falls into the seven-year MACRS property class. The company has to pay property taxes to the local township for ownership of this forging machine at a rate of 1.2% on the beginning book value of each year.(a) Determine the book value of the asset at the beginning of each tax year.(b) Determine the amount of property taxes over the machine's depreciable life.
A company purchased a new forging machineto manufacture disks for airplane turbine engines.The new press cost $3,500,000, and it falls into aseven-year MACRS property class. The companyhas to pay property taxes to the local township forownership of this forging machine at a rate of 1.2%on the beginning book value of each year.(a) Determine the book value of the asset at thebeginning of each tax year.(b) Determine the amount of property taxes over themachine’s depreciable life.
The following allotment and NCA were received by Agency LMN from DBM: P10 million for capital outlay; P12 million for maintenance and other operating expenses; P13 million for personal services. The agency is using an old building for its office. The left wing of this building is no longer being used due to an earthquake that happened years ago which made it unsafe for use. However, engineers and architect were hired to fix the left wing in order for it to be safe for use once again. The engineers and architects are predicting that the left wing is safe for use for the next 10 years assuming that no more strong earthquakes will be experienced. Cost of materials for this project amounted to P14.89 million while labor cost amounted to P12.5 million. The right wing also needs to be repainted. The agency bought paints totaling P3,800,000. Once the renovation was done, all offices were refurnished. New furniture and fixtures and equipment were purchased amounting to P4 million. Office…
Chapter 5 Solutions
Concepts in Federal Taxation 2019 (with Intuit ProConnect Tax Online 2017 and RIA Checkpoint 1 term (6 months) Printed Access Card)
Ch. 5 - Prob. 1DQCh. 5 - Why does the computation of adjusted gross income...Ch. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Prob. 8DQCh. 5 - Prob. 9DQCh. 5 - What is the difference between a trade or business...
Ch. 5 - Prob. 11DQCh. 5 - Prob. 12DQCh. 5 - Prob. 13DQCh. 5 - Prob. 14DQCh. 5 - Prob. 15DQCh. 5 - Prob. 16DQCh. 5 - Prob. 17DQCh. 5 - Prob. 18DQCh. 5 - Prob. 19DQCh. 5 - Prob. 20DQCh. 5 - Prob. 21DQCh. 5 - Prob. 22DQCh. 5 - Prob. 23DQCh. 5 - Prob. 24DQCh. 5 - Prob. 25DQCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Prob. 43PCh. 5 - Prob. 44PCh. 5 - Prob. 45PCh. 5 - Prob. 46PCh. 5 - Prob. 47PCh. 5 - Prob. 48PCh. 5 - Prob. 49PCh. 5 - Prob. 50PCh. 5 - Prob. 51PCh. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - Prob. 56PCh. 5 - Ray, 83, is a used car dealer. He lives in a rural...Ch. 5 - Prob. 58PCh. 5 - Prob. 59PCh. 5 - Prob. 60PCh. 5 - Prob. 61PCh. 5 - Prob. 62PCh. 5 - Prob. 63PCh. 5 - Prob. 64PCh. 5 - Prob. 65PCh. 5 - Prob. 66PCh. 5 - Prob. 67PCh. 5 - Prob. 68PCh. 5 - Prob. 69PCh. 5 - Prob. 70PCh. 5 - Prob. 71PCh. 5 - Prob. 72IIPCh. 5 - Prob. 73IIPCh. 5 - Prob. 74IIPCh. 5 - Prob. 75IIPCh. 5 - Prob. 76IIPCh. 5 - Prob. 77IIPCh. 5 - Prob. 78IIPCh. 5 - Prob. 79IIPCh. 5 - Prob. 80IIPCh. 5 - Prob. 81IIPCh. 5 - Prob. 91CPCh. 5 - Prob. 92DCCh. 5 - Prob. 93DCCh. 5 - Prob. 94DCCh. 5 - Prob. 95TPCCh. 5 - Allison and Paul are married and have no children....
Knowledge Booster
Similar questions
- 1. Greenfield purchased a building ten years ago for $400,000. Since then, the company has maintained the same $400,000 building limit on its commercial property insurance policy. This policy has an 80 percent co-insurance clause and a $10,000 deductible. Recently Greenfield had a tornado claim for $330,000 in damages to the building. When the insurance company adjuster examined the property she discovered the building had an Actual Cash Value of $600,000. Which of the following payments is the insurer likely to make to Greenfield? a. $330,000 b. $320,000 c. $310,000 d. $265,000 e. $216,875arrow_forwardTarhata Company received government grant of P2,000,000 related to a factory building that is purchased in January 2019. Tarhata Company acquired the building from an industrialist identified by the government. If Tarhata Company did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency. Tarhata Company purchased the building for P12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2021, the entire amount of the government grant became repayable by reason of noncompliance with conditions attached to the grant. Required: Prepare all journal entries assuming the government grant is accounted for using: 1. Deferred income approach 2. Deduction from asset approacharrow_forwardOn March 1, 2022, Ayayai Company acquired real estate on which it planned to construct a small office building, by paying $75,000 in cash. An old warehouse on the property was demolished at a cost of $8,000; the salvaged materials were sold for $1,500. Additional expenditures before construction began included $1,000 attorney’s fee for work concerning the land purchase, $4,000 real estate broker’s fee, $7,000 architect’s fee, and $13,000 to put in driveways and a parking lot.Determine the amount to be reported as the cost of the land. Cost of land $enter the cost of land in dollarsarrow_forward
- Leni Company incurred the following costs during the current year: Option fee for land acquired Option fee for land not acquired Taxes in arrears on building on land Payment for land Demolition of old building, net of salvage of P10,000 10,000 10,000 50,000 1,000,000 100,000 Architect fee 230,000 120,000 5,000,000 Payment to city hall for approval of building construction Contract price for factory building Safety fence around construction site Safety inspection on building Removal of safety fence after completion of building New fence surrounding the factory Driveways, parking bays and safety lighting 35,000 30,000 20,000 80,000 550,000 What is the cost of land and building, respectively? (Format of answer should be LAND: 1234567; BUILDING: 1234567)arrow_forwardAyer Industries, Inc., purchased land, paying $95,000 cash as a down payment and signing a $170,000 note payable for the balance. In addition, Ayer Industries, Inc., paid delinquent property tax of $2,200, title insurance costing $5,000, and a $5,600 charge for leveling the land and removing an unwanted building. The company constructed an office building on the land at a cost of $800,000. It also paid $54,000 for a fence around the property, $6,000 for the company sign near the entrance, and $8,000 for special lighting of the grounds. Read the requirements. Requirement 1. Determine the cost of the company's land, land improvements, and building. The cost of the land is S rchased land, paying $95,000 cash as a down payment and signing a $170,000 note payable for the balance. In add tax of $2,200. title insurance costing $5.000, and a $5.600 charge for leveling the land and removing an unwanted t ilding d pany ghting - X Requirements Requirements hine the $ 1. Determine the cost of the…arrow_forward1) McCoy's Fish House purchases a tract of land and an existing building for $1,000,000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price, McCoy pays closing costs, including title insurance of $3,000. The company also pays $14,000 in property taxes, which includes $9,000 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $5,000 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $50,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $5,000 and pays an additional $11,000 to level the land. 1)Determine the amount McCoy’s Fish House should record as the cost of the land. (Amounts to be deducted should be indicated by a minus sign.) University Car Wash built a deluxe car wash across the street from campus. The new machines cost $240,000…arrow_forward
- Larkspur Corporation donates equipment and a truck to the community Home Assistance Centre. The equipment had a cost of $98,000, accumulated depreciation to the contribution date of $41,000, and a fair value of $50,000. The truck had a cost of $49,000, accumulated depreciation to the contribution date of $41,000, and a fair value of $27,000. Prepare the journal entry Larkspur Corporation would make for the donation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Creditarrow_forwardDungan Corporation is evaluating a proposal to purchase a new drill press to replace a less efficient machine presently in use. The cost of the new equipment at time 0, including delivery and Installation, is $205,000. If It is purchased, Dungan will incur costs of $5,200 to remove the present equipment and revamp its facilities. This $5,200 is tax deductible at time 0. Depreciation for tax purposes will be allowed as follows: year 1, $42,000; year 2, $72,000; and in each of years 3 through 5, $32,000 per year. The existing equipment has a book and tax value of $102,000 and a remaining useful life of 10 years. However, the existing equipment can be sold for only $42,000 and is being depreciated for book and tax purposes using the straight-line method over its actual life. Management has provided you with the following comparative manufacturing cost data. Annual capacity (units) Annual costs: Labor a. b. Depreciation Other (all cash) Total annual costs The existing equipment is expected…arrow_forwardDungan Corporation is evaluating a proposal to purchase a new drill press to replace a less efficient machine presently in use. The cost of the new equipment at time 0, including delivery and installation, is $260,000. If it is purchased, Dungan will incur costs of $7,400 to remove the present equipment and revamp its facilities. This $7,400 is tax deductible at time 0. Depreciation for tax purposes will be allowed as follows: year 1, $64,000; year 2, $94,000; and in each of years 3 through 5, $54,000 per year. The existing equipment has a book and tax value of $124,000 and a remaining useful life of 10 years. However, the existing equipment can be sold for only $64,000 and is being depreciated for book and tax purposes using the straight-line method over its actual life. Management has provided you with the following comparative manufacturing cost data. Present Equipment New Equipment Annual capacity (units) 424,000 424,000 Annual costs: Labor $ 60,000…arrow_forward
- Dungan Corporation is evaluating a proposal to purchase a new drill press to replace a less efficient machine presently in use. The cost of the new equipment at time 0, including delivery and installation, is $260,000. If it is purchased, Dungan will incur costs of $7,400 to remove the present equipment and revamp its facilities. This $7,400 is tax deductible at time 0. Depreciation for tax purposes will be allowed as follows: year 1, $64,000; year 2, $94,000; and in each of years 3 through 5, $54,000 per year. The existing equipment has a book and tax value of $124,000 and a remaining useful life of 10 years. However, the existing equipment can be sold for only $64,000 and is being depreciated for book and tax purposes using the straight-line method over its actual life. Management has provided you with the following comparative manufacturing cost data. Present Equipment New Equipment Annual capacity (units) 424,000 424,000 Annual costs: Labor $ 60,000…arrow_forwardLany Co. received a government grant of P2,000,000 related to a factory building that it purchased in January 2022. The entity acquired the building from an industrialist identified by the government. If the entity did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency. The entity purchased the building for P12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2025, 50% of the amount of the government grant became repayable by reason of noncompliance with conditions attached to the grant. Required: 1. Compute the government grant income recognized in 2022. 2. Assuming the deferred income approach is used, compute the loss recognized due to the repayment of the government grant. <arrow_forwardOn March 1, 2025, Sandhill Supply Company acquired real estate, on which it planned to construct a small office building, by paying $90,500 in cash. An old warehouse on the property was demolished at a cost of $14,000; the salvaged materials were sold for $4,000. Additional expenditures before construction began included $3,400 attorney's fee for work concerning the land purchase, $7,400 real estate broker's fee, $11,000 architect's fee, and $25,000 to put in driveways and a parking lot. Your answer is correct. Determine the amount to be recorded as the cost of the land. Cost of the land eTextbook and Media List of Accounts Your answer is partially correct. 111,300 For each cost not used in previous part, indicate the account to be debited. Account to be debited 11,000 25,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you