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In July of 2009, Mr. Mann, a sole proprietor who performs excavating services, purchased and put to use for business a piece of heavy equipment for $36,500. This piece of equipment was depreciated using the MACRS 150% DB method of depreciation over the useful period of 7 years. No salvage value was approximated and applied to the appreciable basis of this equipment. Freight and installation charges for this equipment totaled $1500. Mr. Mann sold this piece of equipment for $31,500 in June of 2011.
For this one-problem, define capital asset and discuss the purpose of depreciation of assets, and why depreciation directly affects valuation of the asset at disposal. Based on the information provided, determine the amount of capital gain or loss Mr. Mann incurred through this transaction. Be certain to detail your calculations for depreciating the equipment, and how this impacts the capital gain or loss associated with the disposal of this capital asset. Explain how any gain on this asset will impact the tax obligation for Mr. Mann as the proprietor.
How should you account for the difference between the carrying value and the purchase price in the consolidated financial statements for 2011?
Scot and Vidia, married taxpayers, earn $240,000 in taxable income and $5,000 in interest from an investment in City of Tampa bonds. Using the U.S. tax rate schedule for married filing jointly, how much federal tax will they owe? What is their ave..
Summary balance sheet data for Greener Gardens Co. is shown below (in thousands of dollars). The company is in a highly seasonal business, and the data show its assets and liabilities at peak and off-peak seasons:
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Evaluate the inventory turnover ratio for 2010 by using the LIFO and FIFO cost-flow assumption methods.
How can a firm's security policies contribute and relate to the six main business objectives and give example.
The following conversation took place between Dean Lancaster, vice president of marketing, and Dina Conaway, controller of Redwood Computer Company:
At the beginning of 2011, VHF Industries acquired a machine with a fair value of $6,074,700 by signing a four-year lease. The lease is payable in four annual payments of $2 million at the end of each year.
A firm has purchased, for 50,000 FCs, an electric generator from a foreign firm. The exchange rates were 1 FC = $0.80 on the delivery date and 1 FC = $0.76 when the payable was paid. What is the final recorded value of the payable if the two-trans..
Under the equity method, a parent company that has guaranteed all of its subsidiary's debt would:
Illustrate the effect on the account and financial statements of paying and recording the March 17th payroll. Determine the following amounts of the employer payroll taxes related to the March 17th payroll: a) FICA tax payable b)state unemployment t..
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