Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Installment sales and cost recovery methods
Mulcahey builders (MB)re-models office buildings in low-income urban areas that are undergoing economic revitalization. MB classically accepts a 25 percent down payment when they complete a job and a note which needs that the remainder be paid in three equal installments over the next three years, plus interest. Because of the inherent uncertainty related with receiving these payments. MB has historically used the cost recovery method to identify revenue. As of 1st January, 2013. MB's outstanding gross installment accounts receivable (not net of deferred gross profit) consist of the subsequent: 1. $400,000 due from the Bluebird Motel. MB completed the Bluebird job in 2011, and evaluated gross profit on that job is 25 percent. 2. $150,000 due from the PitStop Gas and MiniMart. MB completed PitStop job in 2010, and estimated gross profit on that job is 35 percent. Dan Mulcahey has been considering switching from the cost recovery method to the installment sales method, because he wants to demonstrate the highest possible gross profit in 2013 and he understands that installment sales method recognizes gross profit sooner than does the cost recovery technique.
Required :
1. Evaluate how much gross profit is expected to be earned on these jobs in 2013 under the cost recovery method, and how much could be earned if MB instead used the installment sales method. Ignore interest.
2. If Dan is mainly concerned about 2013, do you think he could be happy with a switch to the installment sales method? Describe.
Compute the after-tax cost of each payment assuming she has a 25 % marginal tax rate - Suppose Sarah is a cash-method, calendar-year taxpayer, and she is considering making the subsequent cash payments related to her business.
Purpose a Tax Research Memo in good form regarding the $25,000 relocation loan that Joanne Black described.
Wu has carried on a business of manufacturing toys in Hong Kong for many years. The business closes its accounts to 31 December each year. The tax written down values of plant and machinery - hong kong taxation
Determine the selling price for each bond issue
Identify and show the aspects of consolidated tax expense disclosed in the financial statements- Loss carrybacks and carryforwards.
Prepare the required journal entry to record the tax expense
Evaluate what is Alvin's recognized gain (loss) on this transaction and find what is Alvin's tax basis in his new building?
Carl's Video adds the amount of sales taxes collected directly in price charged for merchandise, and total amount is credited to Sales. During January, Sales was credited for $239,680. The 31st January adjusting entry to account for a 7 percent st..
In which of the accounts shown is the inventory likely to be? At what point may the inventory be transferred to a separate inventory account
average tax rate is more significant than the marginal tax rate.
Determine Ruby Division's economic value added and Determine the brick division's division margin
Prepare a memo to your CFO indicating the outcome of such a change on current taxes and outlining the needs for making this change and provide recommendation to Salem management regarding tax implications of this contribution.
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd