Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 6, Problem 24AP
To determine
Determine Incorporation C’s current year deduction for repairs.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A factory owned by XYZ Inc. was destroyed by fire. XYZ inc. lodged an insurance claim for the value of the factory building, plant, and an amount equal to one year’s net profit. During the year there were a number of meetings with the representatives of the insurance company. Finally, before year-end, it was decided that XYZ Inc. would receive compensation for 90% of its claim. XYZ Inc. received a letter that the settlement check for that amount has been mailed, but it was not received before year-end. How should XYZ Inc. treat this in its financial statements?
Because the settlement of the claim was conveyed by a letter from the insurance company that also stated that the settlement check was in the mail for 90% of the claim, record 90% of the claim as a receivable as it is virtually certain that the contingent asset will be received.
Wait until next year when the settlement check is actually received and not recognized or disclose this receivable at all since at year-end it is a…
A factory owned by Wonder Inc. was destroyed by fire. Wonder Inc. lodged an insurance claim for the value of the factory building, plant and an amount equal to one year’s net profit. During the year, there were a number of meetings with the representatives of the insurance company. Finally, before the year-end, it was decided that Wonder Inc. would receive compensation of 90% of its claim. Wonder Inc. received a letter that the settlement check for that amount had been mailed, but it was not received before year-end. How should Wonder Inc. treat this in its financial statements?
Disclose the contingent asset in the footnotes.
Wait until next year when the settlement check is actually received and not recognize or disclose the receivable at all since at year-end it is a contingent asset.
Because the settlement of the claim was conveyed by a letter from the insurance company, that also stated that the settlement check was in the mail for 90% of the claim, record the 90% of the claim…
Blossom Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company won a contract to build
a road for the municipality of Cochrane West. It is estimated that the project will be completed over a three-year period starting in
June 2023. Blossom uses the percentage-of-completion method of recognizing revenue on its long-term construction contracts. For
tax purposes, and in order to postpone the tax on such revenue for as long as possible, Blossom uses the completed-contract method
allowed by the CRA. For the second year of operations, Blossom made progress on the construction of the road for the municipality.
The account balances at December 31, 2024, for the construction project and the accounting and tax balances of accounts related to
the equipment used for construction follow. (The balances at December 31, 2023, are also listed.)
2024
2023
Accounts Receivable
$105,100
$320,100
Asset/Liability (net of billings to date of $820,100 and…
Chapter 6 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 6 - Prob. 1QPDCh. 6 - Prob. 2QPDCh. 6 - Prob. 3QPDCh. 6 - Prob. 4QPDCh. 6 - For many years, Mr. K, the president of KJ Inc.,...Ch. 6 - Prob. 6QPDCh. 6 - Prob. 7QPDCh. 6 - Firm NB, which uses the cash method of accounting,...Ch. 6 - Prob. 9QPDCh. 6 - Prob. 10QPD
Ch. 6 - Prob. 11QPDCh. 6 - Firms generally prefer to engage in transactions...Ch. 6 - Describe the contrasting treatment of prepaid...Ch. 6 - Net operating losses can be carried forward...Ch. 6 - Nello Company owed 23,400 overdue rent to its...Ch. 6 - For each of the following businesses, indicate the...Ch. 6 - Assuming a 21 percent marginal tax rate, compute...Ch. 6 - Prob. 4APCh. 6 - FruAgro Company has average annual gross receipts...Ch. 6 - Prob. 6APCh. 6 - Firm F is a cash basis legal firm. In 2018, it...Ch. 6 - Prob. 8APCh. 6 - Prob. 9APCh. 6 - Prob. 10APCh. 6 - Brillo Company uses the calendar year and the cash...Ch. 6 - NC Company, a retail hardware store, began...Ch. 6 - Prob. 13APCh. 6 - Warren Company is a calendar year, cash basis...Ch. 6 - Prob. 15APCh. 6 - Wahoo Inc., a calendar year taxpayer, leases...Ch. 6 - Prob. 17APCh. 6 - Using a 21 percent rate, compute the deferred tax...Ch. 6 - Prob. 19APCh. 6 - Prob. 20APCh. 6 - Prob. 21APCh. 6 - Prob. 22APCh. 6 - Prob. 23APCh. 6 - Prob. 24APCh. 6 - Prob. 25APCh. 6 - Prob. 26APCh. 6 - Prob. 27APCh. 6 - BZD, a calendar year corporation, made the...Ch. 6 - Prob. 29APCh. 6 - Prob. 30APCh. 6 - Prob. 31APCh. 6 - Prob. 32APCh. 6 - Prob. 33APCh. 6 - GK Company, a calendar year accrual basis...Ch. 6 - Prob. 35APCh. 6 - Prob. 36APCh. 6 - TRW Inc. began business in 2019 and incurred net...Ch. 6 - Prob. 38APCh. 6 - Prob. 39APCh. 6 - Margaret, a married taxpayer filing a joint...Ch. 6 - Prob. 41APCh. 6 - Prob. 1IRPCh. 6 - Corporation DS owns assets worth 550,000 and has...Ch. 6 - Two years ago, a professional theater company paid...Ch. 6 - Prob. 4IRPCh. 6 - Prob. 5IRPCh. 6 - Prob. 6IRPCh. 6 - Every December, Maxo Inc., an accrual basis,...Ch. 6 - Prob. 8IRPCh. 6 - Prob. 9IRPCh. 6 - Corporation WJ began business in 2019 and elected...Ch. 6 - Prob. 11IRPCh. 6 - Bontaine Publications, an accrual basis, calendar...Ch. 6 - Prob. 2RPCh. 6 - Prob. 3RPCh. 6 - Prob. 4RPCh. 6 - Company Y began business in February 2019. By the...Ch. 6 - Prob. 2TPC
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
- GreenUp, a calendar year, accrual basis taxpayer, provides landscaping installation and maintenance services to its customers. In August 2023, GreenUp contracted with a university to renovate its lawns and gardens. GreenUp agreed to complete the entire renovation by May 31, 2025, and the university prepaid the entire $100,000 fee. GreenUp completed 20 percent of the work in 2023, 65 percent in 2024, and 15 percent in 2025. Required: a. How much revenue should GreenUp report on its financial statements for 2023, 2024, and 2025? b. How much taxable income must GreenUp recognize in 2023, 2024, and 2025? Complete this question by entering your answers in the tabs below. Required A Required B How much taxable income must GreenUp recognize in 2023, 2024, and 2025? Year 2023 2024 2025 $ $ $ Taxable income 20,000 65,000 15,000 Xarrow_forwardOcean Corp.'s comprehensive insurance policy allows its assets to be replaced at current value. The policy has a $50,000 deductible clause. One of Ocean's waterfront warehouses was destroyed in a winter storm. Such storms occur approximately every four years. Ocean incurred $20,000 of costs in dismantling the warehouse and plans to replace it. The tax rate is 30%. The following data relate to the warehouse: Current carrying amount $300,000 Replacement cost Under U.S. GAAP, what amount of gain should Ocean report as a separate component of income from continuing operations? 1,100,000arrow_forwardOcean Corp.'s comprehensive insurance policy allows its assets to be replaced at current value. The policy has a $50,000 deductible clause. One of Ocean's waterfront warehouses was destroyed in a winter storm. Such storms occur approximately every four years. Ocean incurred $20,000 of costs in dismantling the warehouse and plans to replace it. The tax rate is 30%. The following data relate to the warehouse: Current carrying amount $300,000 Replacement cost $ 1,100,000 Under U.S. GAAP, what amount of gain should Ocean report as a separate component of income from continuing operations ? Please answer fastarrow_forward
- During 2021, Ming's Book Store paid $486,000 for land and built a store in Naperville, Illinois. Prior to construction, the city of Naperville charged Ming's $1,000 for a building permit, which Ming's paid. Ming's also paid $15,000 for architect's fees. The construction cost of $670,000 was financed by a long-term note payable, with interest costs of $28,020 paid at the completion of the project. The building was completed June 30, 2021. Ming's depreciates the building using the straight-line method over 35 years, with estimated residual value of $330,000. Read the requirements. ISY ent 1. Journalize transactions for the following (explanations are not required): a. Purchase of the land, b. All the costs chargeable to the building in a single entry, and c. Depreciation on the building for 2021. (Record debits first, then credits. Exclude explanations from any journal entries.) a. Journalize the purchase of the land. Journal Entryarrow_forwardHolt Industries received a $2,000 prepayment from the Ramirez Company for the sale of new office furniture.Holt will bill Ramirez an additional $3,000 upon delivery of the furniture to Ramirez. Upon receipt of the $2,000prepayment, how much should Holt recognize for a contract asset, a contract liability, and accounts receivable?arrow_forwardCompany X incurred the following transactions in the current year. For each transaction, explain whether each transaction is tax deductible under the ITAA. Depreciation on the buildings The company incurred legal expenses opposing an application by its competitor to extend its patent on a brand of mower. If the patent was not extended, then Company X could produce a similar mower. The company borrowed money to cover the purchase of a new plant. The loan is repayable in 10 years. Because of a shortage of working capital, the company was forced to sell off some land. The land had originally been bought in October 1995 The company also purchased a new car for the managing directorarrow_forward
- During 2022, BLC Corporation leased a car for its employee Carmen, at a monthly cost of $983, including all taxes. BLC paid $7043 for the operating costs of the car during 2022. Carmen used the car for 11 months during the year and during the months of non-use, it was returned to BLC's premises. During the year, he drove the car a total of 26031 kilometers of which 16716 kilometers were for personal travel and the remainder was for employment-related use. Calculate Carmen's total taxable benefit arising from the use of the car in 2022.arrow_forwardFaisal has insured his vehicle with AXA insurance company. Throughout the year he experiences a loss in January costing 2,889, another in May costing 2,605 and the last in December costing 1,003. If Faisal has an aggregate deductible of 1,084. How much will the insurer pay?arrow_forwardHero had a delivery van which was destroyed in an accident. On that date, the carying amount of the van was P3, 000, 000. On july 15, the entity receieved and recorded a P50, 000 invoice for a new engine installed in the van in May, and another 100, 000 invoice for various repairs. In August, the entity receieved P4, 200, 000 under an insurance policy on the vn which it plans to use to replace the van. What amount should be reported as gain on disposal of the van in the income statement? A) 800,000 B) o c) 700,000 d) 600,000arrow_forward
- Mary, the vice president in charge of marketing, is provided with a Lexus that the Company has purchased for $78,000. During the current year, this car was driven a total of 25,000 kilometers, of which 18,000 kilometers were employment related. Operating costs for the year amounted to $3,500 and the car was used by Mary throughout the year. Mary paid the Company $200 per month for the use of the car. Calculate the minimum 2020 Taxable benefit for the automobile.arrow_forwardOn January 2, 2018 Mr. B contracted a 1-year P100,000 loan from Metrobank for the purchase of computers. The equipment which had a depreciable life of eight (8) years were acquired on April 1, 2018. The interest expense for one (1) year amounted P15,000. In the same year, his bank deposit with PNB earned an interest income of P2,000. During the year, he incurred an interest expense on unpaid business tax of P600. The deductible interest expense of Mr. B in 2018 is - a. P14,240 c. P14,760 b. P13,600 d. P14,940arrow_forward11. Olabisi operates a lawn care service in southeastern Missouri. Olabisi incurs $63,000 of expenses determining the feasibility of expanding the business to southwestern Missouri. If Olabisi expands the business, the $63,000 is deductible in the current year. If Olabisi does not do so, then the $63,000 must be amortized over a 180-month period. True Falsearrow_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