Homework Answers
| Paver | 345,000 | ||||
| Asset Life | 5 | Years | |||
| Depreciation per year | 69,000 | ||||
| Year | No. of days in a year | Gross Income | Depreciation | Net Income | Tax liability @ 28% |
| 2016 | 172 | 480,000 | 32,515 | 447,485 | 125,296 |
| 2017 | 365 | 550,000 | 69,000 | 481,000 | 134,680 |
| 2018 | 266 | 320,000 | 50,285 | 269,715 | 75,520 |
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A company purchased a paver for $345,000 on July 13th 2016. This a 5 year asset....
The Banin Company was established in 2016. During this year it purchased one asset with five...
The Banin Company was established in 2016. During this year it purchased one asset with five years of useful life. The asset is depreciated based on a straight-line method for financial reporting, and based on an (unspecified) accelerated method for tax reporting. In 2017, the Banin Company was fined $20,000 for unsportsmanlike conduct. The fine is not deductible for tax purposes. There were no other differences between financial and tax reporting over the years. Required: a. Assume the pretax financial...
Farmer Inc. began business on January 1, 2016. Its pretax financial income for the first 3 years was as follows: 2016 $...
Farmer Inc. began business on January 1, 2016. Its pretax financial income for the first 3 years was as follows: 2016 $360,000 2017 420,000 2018 (345,000) The following items caused the only differences between pretax financial income and taxable income. 1. In 2016, the company collected $310,000 of rent; of this amount, $100,000 was earned in 2016; the other $210,000 will be earned equally over the 2017-2018 period. The full $310,000 is included in taxable income in 2016 when the...
Burrell Company purchased a machine for $25000 on January 2, 2016. The machine has an estimated...
Burrell Company purchased a machine for $25000 on January 2, 2016. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $12500 each year. The tax rate is 25%. Required: Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is...
Vibrant Company had $950,000 of sales in each of three consecutive years 2016–2018, and it purchased...
Vibrant Company had $950,000 of sales in each of three consecutive years 2016–2018, and it purchased merchandise costing $525,000 in each of those years. It also maintained a $250,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2016 that caused its year-end 2016 inventory to appear on its statements as $230,000 rather than the correct $250,000. Required: 1. Determine the correct amount of...
On July 1, 2016, Killearn Company acquired 96,000 of the outstanding shares of Shaun Company for...
On July 1, 2016, Killearn Company acquired 96,000 of the outstanding shares of Shaun Company for $17 per share. This acquisition gave Killearn a 40 percent ownership of Shaun and allowed Killearn to significantly influence the investee's decisions. As of July 1, 2016, the investee had assets with a book value of $4 million and liabilities of $1,063,500. At the time, Shaun held equipment appraised at $262,500 above book value; it was considered to have a seven-year remaining life with...
Phipps Car Rentals Ltd commenced operations on 1 July 2016. At this time it purchased 4...
Phipps Car Rentals Ltd commenced operations on 1 July 2016. At this time it purchased 4 cars at a cost of $30,000 each, and proceeded to rent these on a short-term basis to people visiting Canberra. Accounting operating profit before tax was as follows: 2016/7 $250,000 2017/8 $350,000 2018/9 $450,000 For taxation purposes the cars are depreciable at 15% p.a. whilst for accounting purposes they a depreciable at 10% p.a., both straight line. The tax rate for the years 2016/7...
The income statement for Pruitt Company summarized for a four-year period shows the following: 2016 2017...
The income statement for Pruitt Company summarized for a four-year period shows the following: 2016 2017 2018 2019 Sales revenue $ 2,026,000 $ 2,452,000 $ 2,707,000 $ 2,994,000 Cost of goods sold 1,489,000 1,609,000 1,779,000 2,097,000 Gross profit 537,000 843,000 928,000 897,000 Expenses 472,000 495,000 527,000 526,000 Pretax income 65,000 348,000 401,000 371,000 Income tax expense (40%) 26,000 139,200 160,400 148,400 Net income $ 39,000 $ 208,800 $ 240,600 $ 222,600 An audit revealed that in determining these amounts, the...
On July 1, 2016, Killearn Company acquired 102,000 of the outstanding shares of Shaun Company for...
On July 1, 2016, Killearn Company acquired 102,000 of the
outstanding shares of Shaun Company for $16 per share. This
acquisition gave Killearn a 40 percent ownership of Shaun and
allowed Killearn to significantly influence the investee's
decisions.
As of July 1, 2016, the investee had assets with a book value of
$4 million and liabilities of $830,750. At the time, Shaun held
equipment appraised at $148,750 above book value; it was considered
to have a seven-year remaining life with...
Phipps Car Rentals Ltd commenced operations on 1 July 2016. At this time it purchased 4...
Phipps Car Rentals Ltd commenced operations on 1 July 2016. At
this time it purchased 4 cars at a cost of $30,000
each, and proceeded to rent these on a short-term basis to
people visiting Canberra. Accounting operating profit before tax
was as follows:
2016/7
$250,000
2017/8
$350,000
2018/9
$450,000
For taxation purposes the cars are
depreciable at 15% p.a. whilst for accounting purposes
they a depreciable at 10% p.a., both straight
line. The tax rate for the years 2016/7...
Suppose FedEx purchased equipment on January 1, 2016, for $44,000. The expected useful life of the...
Suppose FedEx purchased equipment on January 1, 2016, for $44,000. The expected useful life of the equipment is 10 years or 100,000 units of production, and its residual value is $4,000. Under three depreciation methods, the annual depreciation expense and the balance of accumulated depreciation at the end of 2016 and 2017 are: Method A Method B Method C Annual Annual Annual Depreciation Accumulated Depreciation Accumulated Depreciation Accumulated Year Expense Depreciation Expense Depreciation Expense Depreciation 2016 $4,000 $4,000 $8,800 $8,800...
Farmer Inc. began business on January 1, 2016. Its pretax financial income for the first 3 years was as follows: 2016 $360,000 2017 420,000 2018 (345,000) The following items caused the only differences between pretax financial income and taxable income. 1. In 2016, the company collected $310,000 of rent; of this amount, $100,000 was earned in 2016; the other $210,000 will be earned equally over the 2017-2018 period. The full $310,000 is included in taxable income in 2016 when the...
On July 1, 2016, Killearn Company acquired 102,000 of the
outstanding shares of Shaun Company for $16 per share. This
acquisition gave Killearn a 40 percent ownership of Shaun and
allowed Killearn to significantly influence the investee's
decisions.
As of July 1, 2016, the investee had assets with a book value of
$4 million and liabilities of $830,750. At the time, Shaun held
equipment appraised at $148,750 above book value; it was considered
to have a seven-year remaining life with...
Phipps Car Rentals Ltd commenced operations on 1 July 2016. At
this time it purchased 4 cars at a cost of $30,000
each, and proceeded to rent these on a short-term basis to
people visiting Canberra. Accounting operating profit before tax
was as follows:
2016/7
$250,000
2017/8
$350,000
2018/9
$450,000
For taxation purposes the cars are
depreciable at 15% p.a. whilst for accounting purposes
they a depreciable at 10% p.a., both straight
line. The tax rate for the years 2016/7...
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