K Corporation Inc. owns a restaurant business that it carries on in rented premises. The lease was signed January 1, 2018 and expires on December 31, 2023 (six years in total), and has two successive renewal options for twoyears each. K Corporation Inc. had an opening balance in 2019 in Class 13 of $30,000 that resulted from $32,000 of leasehold improvements made during the 2018 taxation year. K Corp Inc. made an additional $14,000 ofleasehold improvements to the same premises during its 2019 taxation year-end which ends December 31, 2019. What is the maximum CCA that K Corp. Inc. can claim in 2019 for its Class 13 assets?(a) $3,000(b) $5,000(c) $6,000(d) $7,000

Calculations: Class 13 asset rate = 20% To get the maximum CCA, simply: Maximum CCA = Opening…

Answered: K Corporation Inc. owns a restaurant…

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

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter4: Income Exclusions

Section: Chapter Questions

Problem 76IIP

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On December 31, 2019, Lucas Corporation leased a building from Fort Company for seven-year period expiring December 31, 2026. Equal annual payments of P2,000,000 are due on December 31 of each year. beginning with December 31, 2019. The lease is properly classified as a finance lease on Lucas 's books. At inception of the lease, Lucas paid P350,000 as commission to agent and estimated that P400,000 will be paid to restore the property at the end of lease term. The building has a useful life of 20 years at inception of the lease. Lucas guaranteed a residual value of P200,000 at the end of lease term. Assuming all payments are made on time and the rate implicit and effective is at 12%, the amount that should be reported by Lucas Corporation as the lease liability on its December 31, 2022 financial statement is? How much is the balance of the right-of-use asset as of December 31. 2022? O P8,715,380 O P6,282.414 O P7,803,018 O P9.759,803
On January 1, 2021, Winn Heat Transfer leased office space under a three-year lease agreement. The arrangement specified three annual rent payments of $80,000 each, beginning January 1, 2021, the inception of the lease, and at each January 1 through 2023. Winn also paid a $96,000 advance payment at the inception of the lease in addition to the first $80,000 rent payment. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $180,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. The implicit rate of the lease is 8% per annum, which is also Winn’s incremental borrowing rate. Required: Prepare the appropriate entries for Winn Heat Transfer from the inception of the lease through the end of 2021. Winn’s financial year is the calendar year. Winn uses straight-line depreciation.
Fox Company, a dealer in machinery and equipment, leased equipment to Tiger Inc. on July 1, 2019. The lease is appropriately accounted for as a finance lease. The lease is for a 10-year period (the useful life of the asset) expiring June 30, 2029. The first of 10 equal annual payments of $500,000 was made on July 1, 2019. Fox had purchased the equipment for $2,675,000 on January 1, 2019, and established a list selling price of $3,375,000 on the equipment. Assume that the present value at July 1, 2019, of the rent payments over the lease term, discounted at 12% (the appropriate interest rate), was $3,165,000. What is the amount of profit on the sale and the amount of interest income that Fox should record for the year ended December 31, 2019?a. $0 and $159,900b. $490,000 and $159,900c. $490,000 and $189,900d. $700,000 and $189,900
On January 1, 2018, JOSH Corporation leased out an office space for 15 years to PH Corporation at an monthly rental of P60,000. On the same date, JOSH received the following amounts from PH: Annual rental for year 2018 and 2019 Security deposit amounting to P100,000 In addition, PH agreed that it will pay the insurance on the leased property during the first three years of the lease contract amounting to P100,000 per year. Records show that on April 1, 2020, PH introduced leasehold improvement which will be transferred to JOSH upon the end of the lease term. The cost of construction totalled P6,375,000 with the estimated useful life of 20 years. How much should PH report as deductible expense for 2020?
Fox Company, a dealer in machinery and equipment, leased equipment to Tiger Inc. on July 1, 2019. The lease is appropriately accounted for as a finance lease. The lease is for a 10-year period (the useful life of the asset) expiring June 30, 2029. The first of 10 equal annual payments of $500,000 was made on July 1, 2019. Fox had purchased the equipment for $2,675,000 on January 1, 2019, and established a list selling price of $3,375,000 on the equipment. Assume that the present value at July 1, 2019, of the rent payments over the lease term, discounted at 12% (the appropriate interest rate), was $3,165,000. Assuming that Tiger uses straight-line amortization, what is the amount of amortization and interest expense that Tiger should record for the year ended December 31, 2019?
On July 1, 2019, the Manaow Corp., signs a 10-year non-cancelable lease agreement for a storage building owned by Del Inc. The following information pertains to the lease agreement. Annual rental payment is P750,000 beginning July 1, 2019. The rental payment includes P50,000 for taxes and insurance. The fair value of the building on July 1, 2019 is P4,478,000. The building has an estimated economic life of 12 years. Unguaranteed residual value at the end of 10 years is P150,000. Implicit rate is 12%. Under IFRS 16, how much is the impact of the lease transaction to the income statement of Manaow Corp. dated December 31, 2019? A.P495,271 B.P470,271 C.P433,357 D. P408,357
Mando Co. leased a piece of nonspecialized equipment for use in its operations from Empire Leasing on January 1, 2019. The 5- year lease requires annual lease payments of $346, beginning on January 1, 2019. The lease qualifies as an operating lease for the lessee. Mando's incremental borrowing rate is 11%. Mando incurred initial direct costs of $37. What is the lease expense that Mando will record at the end of each year of the lease? (Round to the nearest whole dollar.)
Ebasan Company leased a building to Bu Corporation on January 1 2021. The lease expires on January 1 2026. The annual rental is P3,000,00D. Additionally, on January 1, 2021, Bu paid P500,000 as a lease bonus and P250,000 as a security deposit to be refunded upon expiration of the lease. Ebasan paid P150,000 to a real estate broker as finder fee. During 2021, Ebasan incurred insurance and property tax expense of P100,000. The building was depreciated P150,000 per year. What amount should Ebasan recognize as net rental revenue for 2021?
Kraft Company made the following journal entry in late 2025 for rent received on property it leases to Danford Corporation. Cash 150,000 Unearned Rent Revenue 150,000 The payment represents rent for the years 2026 and 2027, the period covered by the lease. Kraft is a cash basis taxpayer. Kraft has income tax payable of $230,000 at the end of 2025, and its tax rate is 25%. What amount of income tax expense should Kraft Company report at the end of 2025? 3) _______ A) $267,500 B) $211,250 C) $192,500 D) $117,500
Sheridan Company made the following journal entry in late 2021 for rent on property it leases to Danford Corporation. Cash 155000 Unearned Rent Revenue 155000 The payment represents rent for the years 2022 and 2023, the period covered by the lease. Sheridan Company is a cash basis taxpayer. Sheridan has income tax payable of $235000 at the end of 2021, and its tax rate is 25%.Assuming the income taxes payable at the end of 2022 is $260000, what amount of income tax expense would Sheridan Company record for 2022? $298750 $240625 $215625 $279375
On January 1, 2021, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $60,000 each, beginning December 31, 2021, and at each December 31 through 2023. The lessor, HVAC Leasing calculates lease payments based on an annual interest rate of 5%. Winn also paid a $180,000 advance payment at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $240,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:Prepare the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2023. Winn’s fiscal year is the calendar year. (If no entry is required for a transaction/event, select…
On January 1, 2021, Winn Heat Transfer leased office space under a three-year operating lease agreement. The arrangement specified three annual lease payments of $96,000 each, beginning December 31, 2021, and at each December 31 through 2023. The lessor, HVAC Leasing calculates lease payments based on an annual interest rate of 5%. Winn also paid a $321,000 advance payment at the beginning of the lease. With permission of the owner, Winn made structural modifications to the building before occupying the space at a cost of $417,000. The useful life of the building and the structural modifications were estimated to be 30 years with no residual value. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:Compute the appropriate entries for Winn Heat Transfer from the beginning of the lease through the end of 2023. Winn’s fiscal year is the calendar year. (If no entry is required for a transaction/event, select…

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