9. On January 1, 2015, Smith-Jones Company purchased office furniture for $80,000. Other data on the purchase include the following: Estimated useful life 10 years MACRS life 7 years Estimated residual value $5,000 Financial statement depreciation Straight-line MACRS depreciation 200% declining balance The MACRS Depreciation table is as follows: MACRS Depreciation as a Percentage of the Cost of the Asset Year of Life 3 5 7 10 1 33.33% 20.00% 14.29% 10.00% 2 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% 4 7.41% 11.52% 12.49% 11.52% 5 11.52% 8.93% 9.22% 6 5.76% 8.92% 7.37% 7 8.93% 6.55% 8 4.46% 6.55% 9 6.56% 10 6.55% 11 3.28% Required: • Compute the depreciation deduction for the 2015 tax return. • Assume the asset is sold on April 1, 2023 for $3,000. Compute the gain/loss on disposal for both financial reporting and tax reporting.
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For financial reporting, the depreciation method is straight-line. This means that the annual depreciation expense will be the cost of the asset divided by its useful life. For tax reporting, the depreciation method is MACRS (Modified Accelerated Cost Recovery Show more…
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Tamarisk Inc. purchased computer equipment on March 1, 2017, for $33,480. The computer equipment has a useful life of 10 years and a salvage value of $1,080. For tax purposes, the MACRS class life is 5 years. Assuming that the company uses the straight-line method for book and tax purposes, what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017? (Round answer to decimal places, e.g. 5,125.) (1) Depreciation expense reported in the financial statements for 2017 (2) Depreciation expense on the tax return for 2017 Assuming that the company uses the double-declining-balance method for both book and tax purposes, what is the depreciation expense reported in (1) the financial statements for 2017 and (2) the tax return for 2017? (Round answers to 0 decimal places, e.g. 5,125.) (1) Depreciation expense reported in the financial statements for 2017 (2) Depreciation expense on the tax return for 2017
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Use the following information to answer the next six questions: All balances are as of 12/31/2017 unless specified otherwise. Loss on the Sale of Equipment 62,250 Income Tax Expense 48,750 Short Term Investments 1,500 Inventory 97,500 Retained Earnings, 1/1/17 281,000 Gain on Sale of Equipment 27,500 Goodwill 50,000 Cost of Goods Sold 204,000 Common Stock ??? Notes Payable 5/1/18 12,500 Cash 70,000 Sales Revenue 447,500 Accumulated Depreciation 50,000 Dividends 10,000 Notes Payable, due 12/31/19 104,500 Prepaid Expenses 2,500 Furniture 83,000 Accrued Expenses 28,000 Equipment 372,500 Accounts Receivable 42,000 Operating Expenses 43,000 Accounts Payable 36,000 Working Capital as of December 31, 2017. 137,000 Retained Earnings and Cash as of 12/31/2017. D. Retained Earnings $388,000 Cash $70,000 Total Liabilities as of 12/31/2017. E. $181,000 Income from Operations for 2017. $200,500 Determine the Total Assets as of 12/31/2017. A. $719,000 B. $769,000 C. $679,000 D. $669,000 E. $696,500 QUESTION 10 Determine the Profit Margin for the year ended December 31, 2017. A. 26% B. 37% C. 54% D. 382% E. $243,500
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An asset was purchased three years ago for $155,000. It falls into the five-year category for MACRS depreciation. The firm is in a 25 percent tax bracket. Use Table 12-12. a. Compute the tax loss on the sale and the related tax benefit if the asset is sold now for $18,560. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to whole dollars.) b. Compute the gain and related tax on the sale if the asset is sold now for $63,060. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to whole dollars.)
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