Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 46P
a.
To determine
Determine Ms. C’s realized gain.
b.
To determine
Comment on the need that has to be done by the date to achieve the objective.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Tarhata 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 approach
On May 15, 2020, Aldean Company, a calendar year taxpayer, purchased and placed into service a nonresidential building. The company paid $140,000 total and allocated $40,000 of the cost to the land and $100,000 of the cost to the building based on fair market values. Compute Aldean’s maximum first-year depreciation on the realty.
Tarhata Company received a government grant of 2,000,000 related to a factory building purchased in January 2021 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 12,000,000. The useful life of the building is 5 years with no residual value.
On January 1, 2022, the entire amount of the government grant became repayable by reason of non compliance with conditions attached to the grant.
Required:
Prepare journal entries assuming the government grant is accounted for using:
Deferred income approach
Deduction from asset approach
Chapter 15 Solutions
Individual Income Taxes
Ch. 15 - Prob. 1DQCh. 15 - Prob. 2DQCh. 15 - Prob. 3DQCh. 15 - Prob. 4DQCh. 15 - LO.2 Melissa owns a residential lot in Spring...Ch. 15 - LO.2 Ross would like to dispose of some land he...Ch. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - Prob. 9DQCh. 15 - Prob. 10DQ
Ch. 15 - Prob. 11DQCh. 15 - LO.3 Reba, a calendar year taxpayer, owns an...Ch. 15 - Prob. 13DQCh. 15 - Prob. 14DQCh. 15 - Prob. 15DQCh. 15 - Prob. 16CECh. 15 - Prob. 17CECh. 15 - Prob. 18CECh. 15 - Prob. 19CECh. 15 - LO.3 On June 5, 2019, Brown, Inc., a calendar year...Ch. 15 - LO.3 Camilos property, with an adjusted basis of...Ch. 15 - Prob. 22CECh. 15 - Prob. 23CECh. 15 - Prob. 24CECh. 15 - Prob. 25CECh. 15 - Prob. 26CECh. 15 - Prob. 27PCh. 15 - Prob. 28PCh. 15 - Prob. 29PCh. 15 - Prob. 30PCh. 15 - Prob. 31PCh. 15 - Prob. 32PCh. 15 - Prob. 33PCh. 15 - Ed owns investment land with an adjusted basis of...Ch. 15 - Prob. 35PCh. 15 - Prob. 36PCh. 15 - Prob. 37PCh. 15 - Prob. 38PCh. 15 - Prob. 39PCh. 15 - Prob. 40PCh. 15 - LO.3 Howards roadside vegetable stand (adjusted...Ch. 15 - Prob. 42PCh. 15 - Prob. 43PCh. 15 - Prob. 44PCh. 15 - Prob. 45PCh. 15 - Prob. 46PCh. 15 - What are the maximum postponed gain or loss and...Ch. 15 - Prob. 48PCh. 15 - Prob. 49PCh. 15 - Prob. 50PCh. 15 - Prob. 51PCh. 15 - Prob. 52PCh. 15 - Prob. 53PCh. 15 - Prob. 54PCh. 15 - Prob. 55PCh. 15 - Prob. 56PCh. 15 - Devon Bishop, age 45, is single. He lives at 1507...Ch. 15 - Prob. 1RPCh. 15 - Prob. 2RPCh. 15 - Taylor owns a 150-unit motel that was constructed...Ch. 15 - Prob. 6RPCh. 15 - Prob. 1CPACh. 15 - Susie purchased her primary residence on March 15,...Ch. 15 - Chad owned an office building that was destroyed...Ch. 15 - Prob. 4CPACh. 15 - Marsha exchanged land used in her business in...Ch. 15 - Prob. 6CPACh. 15 - Prob. 7CPA
Knowledge Booster
Similar questions
- In March 2019, Helen Carlon acquired used equipment for her business at a cost of 300,000. The equipment is five-year property for regular tax depreciation purposes. a. If Helen depreciates the equipment using the method that will produce the greatest deduction for 2019 for regular income tax purposes, what is the amount of the AMT adjustment? b. Draft a letter to Helen regarding the choice of depreciation methods. Helens address is 500 Monticello Avenue, Glendale, AZ 85306.arrow_forwardOn March 1, 2019, Westmorlan Company acquired real estate on which it planned to construct a small office building. The company paid $75,000 in cash. An old warehouse on the property was razed at a cost of $8,600; the salvaged materials were sold for $1,700. Additional expenditures before construction began included $1,100 attorney’s fee for work concerning the land purchase, $5,000 real estate broker’s fee, $7,800 architect’s fee, and $14,000 to put in driveways and a parking lot.(a)Determine the amount to be reported as the cost of the land.arrow_forwardBev bought a small mom and pop grocery store. The sale was completed and Bev obtained ownership on July 1, 2021. The total cost of the store was $500,000. Of this $100,000 was allocated to Goodwill and $120,000 was allocated to a Covenant Not to Compete the sellers agreed to. The remaining cost was allocated to the building and inventory. Calculate Bev's Section 197 intangibles and the amortization she can claim for 2021.arrow_forward
- HMI Building Ltd. (HBL) purchased a piece of vacant land on March 1, 2020, for$345,000, and incurred an additional $24,000 in transaction costs as part of thispurchase. HBL built an apartment building on this land for $1,235,000, which wascompleted on November 30, 2020, and is expected to have a useful life of 50 years.HBL incurred an additional $1,500 in legal costs on November 30, 2020, to register theaddition of the property to the land title. In December 2020, HBL incurred $35,000 incosts to repair accidental employee damage to the apartment building, which occurredwhen construction equipment was being removed from the premises.HBL had the investment property appraised on December 31, 2020, and the value ofthe property was determined to be $1,655,000. HBL follows IFRS for reportingpurposes.Required:a) Assume that HBL uses the cost model to classify the investment property and usesthe straight-line method to record depreciation. Prepare the journal entries requiredfor HBL to record…arrow_forward7. Karen Company purchased a varnishing machine for P3,000,000 on January 1, 2019. The entity received a government grant of P500,000 in respect of this asset. The accounting policy is to depreciate the asset over 4 years on a straight line basis and to treat the grant as deferred income. How much deferred income from the government grant will be presented in the statement of financial position for 2019?arrow_forwardOn December 1, 2019, Joy Corporation decided to dispose of an item of plant that is carried in its records at a cost of P450,000, with accumulated depreciation of P80,000. Depreciation on the plant since it was originally acquired has been charged at P5,000 per month. The company undertook all the necessary actions to be able to classify the asset as held for sale. It is estimated that it could sell the plant for its fair value, P350,000, incurring P10,000 selling costs in the process. On December 31, 2019, the plant had not been sold but, due to a shortage of this type of plant, there had been an increase in the fair value to P360,000 while expected costs to sell remain at P10,000. If Joy Corporation had not sold the plant as of December 31, 2020 and the recoverable amount at that date is P315,00, the plant should be carried in Joy's statement of financial position at 31 December 2020 atarrow_forward
- Entity A owns a motor van that was involved in an accident at the year-end of 2020. This motor van is barely useable, so the value in use is estimated at $1,500,000. However, the motor van is a common model and there is a demand for its parts. This results in the fair value of $3,600,000 and costs of disposal of $100,000 respectively. On 1 January 2020, the carrying amount of the motor van was $8,000,000 and the van was estimated to have a remaining useful life of 8 years. REQUIRED: According to the accounting standards, prepare the relevant journal entries related to the impairment loss on 31 December 2020. ACCOUNTS FOR INPUT: | Plant | Motor van | Machine | Land | Building | Bank | Payable | Receivable | No entry | | Retained earnings | Other income | Other expense |Interest expense | Interest revenue | | Depreciation | Accum. depreciation | Impairment loss | Reversal of impairment loss | | Restoration liability | Loss on disposal | Gain on disposal | Revaluation surplus |…arrow_forwardOn March 31, 2021, Susquehanna Insurance purchased an office building for $10,200,000. Based on their relative fair values, one-third of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased separately from office equipment on the same date for $1,300,000 and $800,000, respectively. The company uses the straight-line method to depreciate its buildings and the double-declining-balance method to depreciate all other depreciable assets. The estimated useful lives and residual values of these assets are as follows: ServiceLife ResidualValue Building 25 5% of cost Furniture and fixtures 10 5% of cost Office equipment 5 $40,000 Required:Calculate depreciation for 2021 and 2022.arrow_forwardRigg Owusu Enterprises Ltd bought a machine for GH₵ 150,000 on 1st January 2019. It depreciates the machine on cost over four years assuming a nil residual value. The company received a grant of GH₵30,000 from the municipal assembly to support the acquisition of the machines. Account for this grant under the netting off method.arrow_forward
- On March 31, 2021, Susquehanna Insurance purchased an office building for $12,000,000. Based on their relative fair values, one-third of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased separately from office equipment on the same date for $1,200,000 and $700,000, respectively. The company uses the straight-line method to depreciate its buildings and the double-declining-balance method to depreciate all other depreciable assets. The estimated useful lives and residual values of these assets are as follows: Service Residual Life ValueBuilding 30 10% of costFurniture and fixtures 10 10% of costOffice equipment 5 $30,000 Required:Calculate depreciation for 2021 and 2022.arrow_forwardOn March 31, 2021, Susquehanna Insurance purchased an office building for $12,000,000. Based on their relative fair values, one-third of the purchase price was allocated to the land and two-thirds to the building. Furniture and fixtures were purchased separately from office equipment on the same date for $1,200,000 and $700,000, respectively. The company uses the straight-line method to depreciate its buildings and the double-declining-balance method to depreciate all other depreciable assets. The estimated useful lives and residual values of these assets are as follows: ServiceLife ResidualValue Building 30 10% of cost Furniture and fixtures 10 10% of cost Office equipment 5 $30,000 Required:Calculate depreciation for 2021 and 2022. (Do not round intermediate calculations.) Depreciation 2021 2022 Building Furniture and fixtures Office equipmentarrow_forwardOn April 1, 2018, the Apex Corporation sold a parcel of underdeveloped land to the Applegate ConstructionCompany for $2,400,000. The book value of the land on Apex’s books was $480,000. Terms of the sale required adown payment of $120,000 and 19 annual payments of $120,000 plus interest at an appropriate interest rate due oneach April 1 beginning in 2019. Apex has no significant obligations to perform services after the sale.Required:1. Prepare the necessary entries for Apex to record the sale, receipt of the down payment, and receipt of the firstinstallment assuming that Apex is able to make a reliable estimate of possible uncollectible amounts (that is,profit is recognized upon delivery). Ignore interest charges.2. Repeat requirement 1 assuming that Apex cannot make a reliable estimate of possible uncollectible amountsand decides to use the installment sales method for profit recognitionarrow_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