breakdown loss, Long Industries incurred various expenses. In Long's Equipment Breakdown Protection Coverage Form, expediting expenses include which one of the following? The cost for Long to rent another building in order to continue operations The costs of overnight shipping for Long to obtain a machine part The cost for Long to rent computer equipment Long's loss of net income

breakdown loss, Long Industries incurred various expenses. In Long's Equipment Breakdown Protection Coverage Form, expediting expenses include which one of the following? The cost for Long to rent another building in order to continue operations The costs of overnight shipping for Long to obtain a machine part The cost for Long to rent computer equipment Long's loss of net income

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter3: Business Income And Expenses

Section: Chapter Questions

Problem 12MCQ

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Accounting treatment for contingencies Analyze the following independent situations. a. Weaver, Inc. is being sued by a former employee. Weaver believes that there is a remote chance that the employee will win. The employee is suing Weaver or damages of $40,000. b. Gulf Oil Refinery had a gas explosion on one of its oil rigs. Gulf believes it is likely that it will have to pay environmental Clean-up Costs and damages in the future due to the gas explosion. Gulf cannot estimate the amount of the damages. c. Lawson Enterprises estimates that it will have to pay $75,000 in warranty repairs next year. Determine how each contingency should be treated
Accounting treatment for contingencies Analyze the following independent situations. Weaver, Inc. is being sued by a former employee. Weaver believes that there is a remote chance that the employee will win. The employee is suing Weaver or damages of $40,000. Gulf Oil Refinery had a gas explosion on one of its oil rigs. Gulf believes it is likely that it will have to pay environmental Clean-up Costs and damages in the future due to the gas explosion. Gulf cannot estimate the amount of the damages. Lawson Enterprises estimates that it will have to pay $75,000 in-warranty repairs next year. Determine how each contingency should be treated
Which of the following are includable to the cost of property and equipment? Transportation costs on machinery purchased under terms FOB shipping point Interest on loans borrowed to purchase an equipment Installation costs and cost of trial runs of a machinery Repairs on broken glass windows of a purchased buildings prior to occupancy
Button Transportation purchases many pieces of office furniture with an individual cost below$200 each. Button chooses to account for these expenditures as expenses when acquired ratherthan reporting them as property, plant, and equipment on its balance sheet. The company'saccountant and independent CPA agree that no accounting principle has been violated. Whataccounting justification allows Button to expense the furniture?a. Conservatismb. Matchingc. Materialityd. Verifiability
Depreciation of a factory equipment is treated as ____, while deprecation of an automobile used for sales staff is treated as ____.
1. A manufacturer of household appliances has potential costs due to the discovery of a defect in one of its products. The occurrence of the loss is probable and the costs can be reasonably estimated. This present obligation should be: accrued and disclosed as a liability. neither accrued nor disclosed as a liability. accrued as a liability but not disclosed. disclosed but not accrued as a liability. 2. A contingency that need not be disclosed in the financial statements or in the notes thereto is: pending litigation. possibility of strike. deficiency tax assessment. note receivable discounted. 3. A loss contingency that should be accrued is: note receivable discounted. pending lawsuit. tax in dispute. estimated claim under a service warranty on new products sold. 4. An item that is not a contingent liability is: premium offer to customers for labels or box tops. accommodation endorsement on customer note. additional compensation that may be payable on a dispute now being…
Prepare journal entries to record these transactions. (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 0 for the amounts.) Blossom Company retires its delivery equipment, which cost $40,000. Accumulated depreciation is also $40,000 on this delivery equipment. No salvage value is received. Assume the same information as in part (a), except that accumulated depreciation for the equipment is $36,000 instead of 40,000. (a) (b) No. Account Titles and Explanation Debit Credit (a) (b)
John Smith mistakenly expensed the cost of a long-term tangible fixed asset. Specifically, he charged the cost of a truck to a delivery expense account. How will this error affect the income statement and the balance sheet in the year in which the mistake is made?
To what extent do you consider the following items to be proper costs of the fixed asset? Give reasons for your opinions. a. Overhead of a business that builds its own equipment. b. Cash discounts on purchases of equipment. c. Interest paid during construction of a building. d. Cost of a safety device installed on a machine. e. Freight on equipment returned before installation, for replacement by other equipment of greater capacity. f. Cost of moving machinery to a new location. g. Cost of plywood partitions erected as part of the remodeling of the office. h. Replastering of a section of the building. i. Cost of a new motor for one of the trucks.
Which of the following statements is false? Under IFRS, expenses include losses that are not the result of ordinary activities. Under IFRS, it is mandatory to report property, plant, and equipment at historical cost. The number of financial statement elements in the IFRS conceptual framework are not equal to those in GAAP. The existing conceptual frameworks underlying GAAP and IFRS are very similar.                   Icon International, a software company, incorporated on January 1, 2019 is planning to convert to IFRS. The company decided to present its first IFRS statements for the year ended December 31, 2021. What is the transition date of Icon International? January 1, 2019 January 1, 2021 December 31, 2021 December 31, 2019 Icon International, a software company, incorporated on January 1, 2019 is planning to convert to IFRS. The company decided to present its first IFRS statements for the year ended December 31, 2021. What is the reporting date of Icon…
When a plant asset is traded for another of similar asset, losses on the asset traded are not recognized. ____     7.   Receiving payment prior to delivering goods or services causes a current liability to be incurred. ____     8.   One of the most popular defined benefit plans is the 401K plan. ____     9.   All long-term liabilities eventually become current liabilities. ____    10.       The cost of new equipment is called a revenue expenditure because it will help generate revenues in the future True and false questions....
The following are costs related to the purchase of a second-hand piece of equipment. Required: Indicate with an 'X' in the appropriate column whether the expenditure should be included in the cost of the asset. Include in the Not included Asset total In the Asset Total Description of cost expenditure Freight Installation Repair of vandalism during installation Replacement of worn-out parts at time of purchase Repair of damage incurred in reconditioning the equipment Fees paid to attorney to review purchase agreement B Computer equipment that was originally purchased for $              170,000 and now has an accumulated depreciation balance of $              130,000 is sold for cash of $                60,000 Total $              360,000 Required: Record the sale of the computer equipment…

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		The cost for Long to rent another building in order to continue operations
		The costs of overnight shipping for Long to obtain a machine part
		The cost for Long to rent computer equipment
		Long's loss of net income