in the current year, Keyaki Construction Company exchanged a building, which cost $530,000 and had accumulated depreciation of $160,000, for a new building having a fair market value of $650,000 In connection with the exchange, Keyaki paid $280,000 in cash. What is the tax basis of the new building
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in the current year, Keyaki Construction Company exchanged a building, which cost $530,000 and had
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- Watanabe Corporation is selling one of its assets for $1,700. The asset originally cost $10,000. It has been depreciated under MACRS using a five-year recovery period, and it has been depreciated for four full years. Assume that the tax rate is 40 percent on both ordinary income and capital gains. What are the tax effects of this transaction? Jellibean Corporation will replace one of its existing assets with a newer type. The existing asset was purchased two years ago at a cost of $30,000 and was being depreciated under MACRS using a five-year recovery period. This existing asset can be sold for $25,000. The new asset that they plan to buy will cost $75,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on both ordinary income and capital gains, the initial investment will be equal to what amount after adjusting for taxes? Calculate the initial purchase price for an asset that has a book value of $34,800 and has…Several years ago, PTR purchased business equipment for $50,000. PTR’saccumulated book depreciation with respect to the equipment is $37,200, and itsaccumulated tax depreciation is $41,000.Required:a.Compute PTR’s book and tax basis in the equipment.b. Using a 21 percent tax rate, compute PTR’s deferred tax asset or liability (identifywhich) resulting from the difference between accumulated book and taxdepreciation.c. Compute PTR’s book and tax gain if it sells the equipment for $14,750.Kris, Inc. sold its vacant lot to Moca Corp. for P 10,000,000 which it acquired at a cost of P 5,000,000. The fair market value of the said property per tax declaration is P 12,000,000, while its zonal value is P 15,000,000. How much is the income tax applicable on the transactions? P 1,500,000 P 900,000 P 720,000 P 600,000
- 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 $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…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…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…
- Several years ago, Marathon Oil Corp. purchased equipment for $16,500,000. Marathon Oil uses straight-line depreciation for financial reporting and accelerated depreciation for tax purposes. At December 31, 2020, the carrying value of the equipment was $14,850,000 and its tax basis was $12,375,000. At December 31, 2021, the carrying value of the equipment was $13,200,000 and the tax basis was $9,075,000. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $21,500,000. A tax rate of 25% applies to all years. Required:Prepare the journal entry to record Marathon Oil's income tax expense for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)Several years ago, Western Electric Corp. purchased equipment for $21,000,000. Western uses straight-line depreciation for financial reporting and accelerated depreciation for tax purposes. At December 31, 2020, the carrying value of the equipment was $18,900,000 and its tax basis was $15,750,000. At December 31, 2021, the carrying value of the equipment was $16,800,000 and the tax basis was $11,550,000. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $26,000,000. A tax rate of 25% applies to all years. Required:Prepare the journal entry to record Western's income tax expense for the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)On July1, 2022, Pepperpot Company made a lump sum purchase of an office building, including the land and some fixtures, for cash of $550,000. The tax assessments for the past year reflected the following: Land, $48,000; Building, $168,000; and Fixtures, $24,000. Pepperpot believes they will use the building for another 20 years at which time they expect to sell it of $45,000. The fixtures only have a five year life and Pepperpot expects they will have a residual value of $2,000 when they are sold. Pepperpot depreciates their real estate holdings on a straight line basis. All fixtures are depreciated using declining balance method. a. Prepare the journal entry to record the acquisition. Show your work. b. Prepare any year end adjustments required. c. Show how the assets will be presented on the December 31, 2022 financial statements.
- During the year, JK Corporation has gross sales of P20,000,000 and operating expenses of P2,000,000, inclusive of representation expense amounting to P300,000 with proper documentation. How much is the allowable regular itemized deductions? A foreign corporation sold a condominium unit to Mr. Mauricio for P10 million which it acquired at a cost of P5 million. The fair market value of the said property per tax declaration was P12 million while its zonal value was P15 million. How much is the capital gains tax?PUP CAF Company acquired a property for speculation purposes with the intention of selling it at a higher price in the long-term. The property was acquired at a cash price of P3,000,000. The property has P100,000 unpaid real property tax assumed by PUP CAF Company. In addition, the company also paid the following transaction costs: broker’s commission of P20,000 and registration cost of P35,000. How much PUP CAF should record as Investment Property?Ayres Services acquired an asset for $112 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions) 2021 2022 2023 2024 Pretax accounting income Depreciation on the income $350 $370 $385 $420 28 28 28 28 statement Depreciation on the tax return (53) (29) (19) (11) Taxable income $325 $369 $394 $437 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "O" wherever applicable. Enter your answers in millions rounded to 2 decimal place (i.e., 5,500,000 should be entered as 5.50).) Beginning of 2021 End of 2021 End of 2022…