Details of this Paper

At the beginning of 2010, Pitman Co. purchased an...

Description

Solution


Question

At the beginning of 2010, Pitman Co. purchased an asset for $600,000 with an estimated useful life of 5 years and an estimated salvage value of $50,000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pitman Co.'s tax rate is 40% for 2010 and all future years. At the end of 2010, what is the book basis and the tax basis of the asset? Book basis Tax basis $440,000 $360,000 $490,000 $360,000 $440,000 $310,000 $490,000 $310,000 Click here if you would like to Show Work for this question At the beginning of 2010, Pitman Co. purchased an asset for $600,000 with an estimated useful life of 5 years and an estimated salvage value of $50,000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pitman Co.'s tax rate is 40% for 2010 and all future years. At the end of 2010, which of the following deferred tax accounts and balances is reported on Pitman's balance sheet? Account Balance Deferred tax liability $52,000 Deferred tax asset $78,000 Deferred tax asset $52,000 Deferred tax liability $78,000 Click here if you would like to Show Work for this question Mathis Co. at the end of 2010, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $500,000 Estimated litigation expense 1,250,000 Installment sales (1,000,000) Taxable income $750,000 The estimated litigation expense of $1,250,000 will be deductible in 2012 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $500,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $500,000 current and $500,000 noncurrent. The income tax rate is 30% for all years. The deferred tax asset to be recognized is $375,000 noncurrent. $375,000 current. $75,000 current. $0. Click here if you would like to Show Work for this question Mathis Co. at the end of 2010, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $500,000 Estimated litigation expense 1,250,000 Installment sales (1,000,000) Taxable income $750,000 The estimated litigation expense of $1,250,000 will be deductible in 2012 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $500,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $500,000 current and $500,000 noncurrent. The income tax rate is 30% for all years. The deferred tax liability?current to be recognized is $225,000. $150,000. $300,000. $75,000. Click here if you would like to Show Work for this question On January 1, 2011, Sauder Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Sauder to make annual payments of $50,000 at the beginning of each year for five years with title to pass to Sauder at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Sauder uses the straight-line method of depreciation for all of its fixed assets. Sauder accordingly accounts for this lease transaction as a capital lease. The minimum lease payments were determined to have a present value of $208,493 at an effective interest rate of 10%. In 2011, Sauder should record interest expense of $29,151. $20,849. $15,849. $34,151. Click here if you would like to Show Work for this question On January 1, 2011, Sauder Corporation signed a five-year noncancelable lease for equipment. The terms of the lease called for Sauder to make annual payments of $50,000 at the beginning of each year for five years with title to pass to Sauder at the end of this period. The equipment has an estimated useful life of 7 years and no salvage value. Sauder uses the straight-line method of depreciation for all of its fixed assets. Sauder accordingly accounts for this lease transaction as a capital lease. The minimum lease payments were determined to have a present value of $208,493 at an effective interest rate of 10%. In 2012, Sauder should record interest expense of $12,434. $15,849. $17,434. $10,849. Click here if you would like to Show Work for this question Emporia Corporation is a lessee with a capital lease. The asset is recorded at $450,000 and has an economic life of 8 years. The lease term is 5 years. The asset is expected to have a market value of $150,000 at the end of 5 years, and a market value of $50,000 at the end of 8 years. The lease agreement provides for the transfer of title of the asset to the lessee at the end of the lease term. What amount of depreciation expense would the lessee record for the first year of the lease? $90,000 $60,000 $50,000 $80,000 Click here if you would like to Show Work for this question On January 15, 2011, Vancey Company paid property taxes on its factory building for the calendar year 2011 in the amount of $560,000. In the first week of April 2011, Vancey made unanticipated major repairs to its plant equipment at a cost of $1,400,000. These repairs will benefit operations for the remainder of the calendar year. How should these expenses be reflected in Vancey's quarterly income statements? Three Months Ended 3/31/11 6/30/11 9/30/11 12/31/11 a. $140,000 $606,667 $606,667 $606,667 b. $140,000 $1,540,000 $140,000 $140,000 c. $560,000 $1,400,000 $ -0- $ -0- d. $490,000 $490,000 $490,000 $490,000 b c d a Fina Corp. had the following transactions during the quarter ended March 31, 2011: Loss from hurricane damage $350,000 Payment of fire insurance premium for calendar year 2011 500,000 What amount should be included in Fina's income statement for the quarter ended March 31, 2011? Extraordinary Loss Insurance Expense a. $350,000 $500,000 b. $350,000 $125,000 c. $87,500 $125,000 d. $0 $500,000 b c d a Click here if you would like to Show Work for this question On November 1, 2010, Howell Company purchased 600 of the $1,000 face value, 9% bonds of Ramsey, Incorporated, for $632,000, which includes accrued interest of $9,000. The bonds, which mature on January 1, 2015, pay interest semiannually on March 1 and September 1. Assuming that Howell uses the straight-line method of amortization and that the bonds are appropriately classified as available-for-sale, the net carrying value of the bonds should be shown on Howell's December 31, 2010, balance sheet at $622,080. $632,000. $600,000. $623,000. Click here if you would like to Show Work for this question Backup Copy Attached.,Please make sure the previous $9 is refunded to my credit card.,Thank you so much. You are a lifesaver.

 

Paper#3465 | Written in 18-Jul-2015

Price : $25
SiteLock