For $1 million, Dempsey Inc. purchased stock in a corporation that held only one asset, an...
For $1 million, Dempsey Inc. purchased stock in a corporation that held only one asset, an FCC license, and thus is unable to treat the purchase as a business combination. The tax basis in the asset was $0. What method should Dempsey use to assign the value to the asset and the deferred tax liability?
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For $1 million, Dempsey Inc. purchased stock in a corporation
that held only one asset, an...
Lexington Corporation acquired all of the outstanding common stock of Chalfont, Inc., on January 1, 2016....
Lexington Corporation acquired all of the outstanding common
stock of Chalfont, Inc., on January 1, 2016. Lexington gave shares
of its no par common stock with a market value of $504 million in
exchange for the Chalfont common stock. Chalfont will remain a
legally separate entity after the exchange, but Lexington will
prepare consolidated financial statements with Chalfont each
period. Exhibit 8.22 presents the balance sheets of Lexington and
Chalfont on January 1, 2016, just prior to the acquisition. The...
Ayres Services acquired an asset for $88 million in 2018. The asset is depreciated for financial...
Ayres Services acquired an
asset for $88 million in 2018. The asset is depreciated for
financial reporting purposes over four years on a straight-line
basis (no residual value). For tax purposes the asset’s cost is
depreciated by MACRS. The enacted tax rate is 40%. Amounts for
pretax accounting income, depreciation, and taxable income in 2018,
2019, 2020, and 2021 are as follows:
Ayres Services acquired an asset for $88 million in 2018. The asset is depreciated for financial reporting purposes...
Luther Corporation has been owned for six years with its stock held 60 percent by John...
Luther Corporation has been owned for six years with its stock held 60 percent by John (Stock basis of $162,000) and 40 percent by Alice (stock basis of S181,575). John and Alice are not related. Luther Corporation has the following assets on December 31, 2019: Adjusted Basis to Luther Corporation Fair Market value Cash. ...........................$ 8,100 .................................. 8,100 - Inventory ............................................ 113.400 ... ............... 40,500 - Office building ................... .......40,500 - Stock held for investment.................24,300 ......................... 42,000 in unrelated Corporation...
2. Green, Inc., a C corporation, distributes a tract of land held as an investment (FMV S500,000,...
Please show your work.
2. Green, Inc., a C corporation, distributes a tract of land held as an investment (FMV S500,000, basis $220,000) and its mortgage of $550,000 to Susan in return for 50 of her shares at the end of the year. Green, Inc. has a current E&P of $190,000 for the year, and started the year an accumulated E & P of $60,000. Green's marginal tax rate is 21%. Susan has an individual marginal tax rate of 33%...
ONLY NEED REQUIRMENTS 1 AND 3 Sherrod, Inc., reported pretax accounting income of $78 million for...
ONLY NEED REQUIRMENTS 1 AND 3
Sherrod, Inc., reported pretax accounting income of $78 million
for 2018. The following information relates to differences between
pretax accounting income and taxable income:
Income from installment sales of properties included in pretax
accounting income in 2018 exceeded that reported for tax purposes
by $3 million. The installment receivable account at year-end had a
balance of $4 million (representing portions of 2017 and 2018
installment sales), expected to be collected equally in 2019 and...
Corning-Howell reported taxable income in 2018 of $230 million. At December 31, 2018, the reported amount...
Corning-Howell reported taxable income in 2018 of $230 million. At December 31, 2018, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below: Carrying Tax Basis $ 20 million $ 14 million 46 million 4 million Assets Current Net accounts receivable Prepaid insurance Prepaid advertising Noncurrent Investments at tair value with changes in OCI. Buildings and equipment (net) Liabilities Current Liability-subscriptions received Long-term Liability-postretirement benefits 5 million 440 million 360...
Reddick Inc. purchased machinery on 1/1/2018 for $220,000. Assuming no salvage value, JV depreciated the asset...
Reddick Inc. purchased machinery on 1/1/2018 for $220,000. Assuming no salvage value, JV depreciated the asset straight line over a 4-year life for Book purposes, and 3-year life for Tax purposes. Assume a zero residual for both book and tax. Required: (a) What would be the balance in the Deferred Tax Liability account at the end of each year, assuming a 30% tax rate? (b) What would be the journal entry if Reddick sold the asset for $30,000 at the beginning of year...
Ayres Services acquired an asset for $160 million in 2021. The asset is depreciated for financial...
Ayres Services acquired an asset for $160 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25% Amounts for pretax accounting income, depreciation, and taxable income in 2021 2022 2023, and 2024 are as follows: 666 ($ in millions) 2022 2023 O 415 2021 $ 0 2024 Pretax accounting income Depreciation on...
The financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by...
The financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by $158,000 at December 31, 2016. This was a result of differences between straight-line depreciation for financial reporting purposes and MACRS for tax purposes. The asset was acquired earlier in the year. Boze has no other temporary differences. The enacted tax rate is 25% for 2016 and 32% thereafter. Boze should report the deferred tax effect of this difference in its December 31, 2016, balance...
Ayres Services acquired an asset for $96 million in 2021. The asset is depreciated for financial...
Ayres Services acquired an asset for $96 million in 2021. The
asset is depreciated for financial reporting purposes over four
years on a straight-line basis (no residual value). Ayers deducted
100% of the asset's cost for income tax reporting in 2021. The
enacted tax rate is 25%. Amounts for pretax accounting income,
depreciation, and taxable income in 2021, 2022, 2023, and 2024 are
as follows: ($ in millions) 2021 2022 2023 2024 Pretax accounting
income $ 340 $ 360 $...
Lexington Corporation acquired all of the outstanding common
stock of Chalfont, Inc., on January 1, 2016. Lexington gave shares
of its no par common stock with a market value of $504 million in
exchange for the Chalfont common stock. Chalfont will remain a
legally separate entity after the exchange, but Lexington will
prepare consolidated financial statements with Chalfont each
period. Exhibit 8.22 presents the balance sheets of Lexington and
Chalfont on January 1, 2016, just prior to the acquisition. The...
Ayres Services acquired an
asset for $88 million in 2018. The asset is depreciated for
financial reporting purposes over four years on a straight-line
basis (no residual value). For tax purposes the asset’s cost is
depreciated by MACRS. The enacted tax rate is 40%. Amounts for
pretax accounting income, depreciation, and taxable income in 2018,
2019, 2020, and 2021 are as follows:
Ayres Services acquired an asset for $88 million in 2018. The asset is depreciated for financial reporting purposes...
Luther Corporation has been owned for six years with its stock held 60 percent by John (Stock basis of $162,000) and 40 percent by Alice (stock basis of S181,575). John and Alice are not related. Luther Corporation has the following assets on December 31, 2019: Adjusted Basis to Luther Corporation Fair Market value Cash. ...........................$ 8,100 .................................. 8,100 - Inventory ............................................ 113.400 ... ............... 40,500 - Office building ................... .......40,500 - Stock held for investment.................24,300 ......................... 42,000 in unrelated Corporation...
Please show your work.
2. Green, Inc., a C corporation, distributes a tract of land held as an investment (FMV S500,000, basis $220,000) and its mortgage of $550,000 to Susan in return for 50 of her shares at the end of the year. Green, Inc. has a current E&P of $190,000 for the year, and started the year an accumulated E & P of $60,000. Green's marginal tax rate is 21%. Susan has an individual marginal tax rate of 33%...
ONLY NEED REQUIRMENTS 1 AND 3
Sherrod, Inc., reported pretax accounting income of $78 million
for 2018. The following information relates to differences between
pretax accounting income and taxable income:
Income from installment sales of properties included in pretax
accounting income in 2018 exceeded that reported for tax purposes
by $3 million. The installment receivable account at year-end had a
balance of $4 million (representing portions of 2017 and 2018
installment sales), expected to be collected equally in 2019 and...
Corning-Howell reported taxable income in 2018 of $230 million. At December 31, 2018, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below: Carrying Tax Basis $ 20 million $ 14 million 46 million 4 million Assets Current Net accounts receivable Prepaid insurance Prepaid advertising Noncurrent Investments at tair value with changes in OCI. Buildings and equipment (net) Liabilities Current Liability-subscriptions received Long-term Liability-postretirement benefits 5 million 440 million 360...
Ayres Services acquired an asset for $160 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25% Amounts for pretax accounting income, depreciation, and taxable income in 2021 2022 2023, and 2024 are as follows: 666 ($ in millions) 2022 2023 O 415 2021 $ 0 2024 Pretax accounting income Depreciation on...
Ayres Services acquired an asset for $96 million in 2021. The
asset is depreciated for financial reporting purposes over four
years on a straight-line basis (no residual value). Ayers deducted
100% of the asset's cost for income tax reporting in 2021. The
enacted tax rate is 25%. Amounts for pretax accounting income,
depreciation, and taxable income in 2021, 2022, 2023, and 2024 are
as follows: ($ in millions) 2021 2022 2023 2024 Pretax accounting
income $ 340 $ 360 $...
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