Erwin Company, a calendar year taxpayer, made only two purchases of depreciable personalty this year. The first purchase was five-year recovery property costing $312,800, and the second purchase was seven-year recovery property costing $574,000. Compute Erwin's first-year MACRS depreciation with respect to the personalty assuming that a. The first purchase occurred on February 2, and the second purchase occurred on June 18.
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- 18. Ryland Company, a calendar year taxpayer, purchased commercial realty for $2 million and allocated $200,000 cost to the land and $1.8 million cost to the building. Ryland placed the real estate in service on May 21. a. Compute Ryland's MACRS depreciation with respect to the realty for the year of purchase. b. How would your answer change if Ryland placed the realty in service on September 2 instead of May 21? c. How would your answer to part (a) change if the building was a residential apartment complex instead of a commercial office?On 1 January 20X8 Davidoff Co decided to revalue its land for the first time. A qualified property valuer reported that the market value of the land on that date was $45,000. The land was originally purchased 6 years ago for $32,000 The required provision for income tax for the year ended 31 December 20X8 is $15,500. The difference between the carrying amounts of the net assets of Davidoff (including the revaluation of the land above) and their (lower) tax base at 31 December 20X8 is $38,000. The opening balance on the deferred tax account was $5,500. Davidoff’s rate of income tax is 30%. Required Prepare extracts of the financial statements to show the effect of the above transactions.On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,800,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $390,000 of the goodwill had been impaired and wrote down the goodwill by $390,000 for book purposes. Required 1. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? Book-tax difference Is it favorable or unfavorable? Is it permanent or temporary? Show Transcribed Text 2. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary? Book-tax difference Is it favorable or unfavorable? Is it permanent or…
- On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $2,106,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $460,000 of the goodwill had been impaired and wrote down the goodwill by $460,000 for book purposes. Required: a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary? Complete this question by entering your answers in the tabs below. Req A Req BOn July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,710,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $670,000 of the goodwill had been impaired and wrote down the goodwill by $670,000 for book purposes. Required: What book–tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? What book–tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary?On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $2.115.000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2. however, RC concluded that $350,000 of the goodwill had been impaired and wrote down the goodwill by $350,000 for book purposes. Required: a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary? Complete this question by entering your answers in the tabs below.
- Would you please explain how to find the minimum taxable capital gain to be reported in Year 2? sold capital property in Year 1 for net proceeds of $500,000. The property has an adjusted cost base of $100,000. C received $200,000 at the time of the sale and a note for the balance to be paid in equal annual instalments over the following three years. What is the minimum taxable capital gain to be reported in Year 2?In its first year, Firm KZ recognized $457,500 ordinary business income and a $13,250 loss on the sale of an investment asset. In its second year, Firm KZ recognized $518,000 ordinary business income, a $20,350 Section 1231 gain, and a $8,070 Section 1231 loss on two sales of operating assets. Required: a. Compute KZ's book and taxable income for its first year. b. Using a 21 percent tax rate, compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the year. c. Compute KZ's book and taxable income for its second year. d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year. Answer is not complete. Complete this question by entering your answers in the tabs below. Req A and B Req C and D c. Compute KZ's book and taxable income for its second year. d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year. Note:…On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,620,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $635,000 of the goodwill had been impaired and wrote down the goodwill by $635,000 for book purposes. Required: a. What book-tax difference associated with its goodwill should RC report in year 1? Is it favorable or unfavorable? Is it permanent or temporary? b. What book-tax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary? Complete this question by entering your answers in the tabs below. Required A Required B What book-tax difference associated with its goodwill should RC report in year 1? Is…
- Ayres Services acquired an asset for $82 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020, and 2021 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return. Taxable income. ($ in millions) 2019 355 $ 20.5 (33.5) Temporary Difference Deferred Tax Liability 2018 $ 335 $ 20.5 (25.5) $ 330 $ 342 $ 375 2020 2021 370 $ 405 20.5 20.5 (15.5) (7.5) $ 418 Required: Determine (a) the temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Show all amounts as positive amounts. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should…On 1 January 2*17, X Co incurred $3,750 of costs in relation to the development of a new product. These costs were deducted for tax purposes in 2*17. For accounting purposes, X Co capitalised this expenditure and amortised it on straight-line basis over five years.Gold Company, a calendar year taxpayer, sold two operating assets this year (each held for over a year). The first sale generated a $20,000 Section 1231 loss, and the second sale generated a $30,000 Section 1231 gain. As a result of these sales, Gold should recognize: Group of answer choices No gain or loss $10,000 gain treated as capital gain $10,000 ordinary income $20,000 ordinary loss and $30,000 gain treated as capital gain