A piece of land personally owned by John was transferred to the business for the use of its operation. The land was acquired 2 years ago with a cost of $50,000. The market value as of this date is $75,000.
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A piece of land personally owned by John was transferred to the business for the use of its operation. The land was acquired 2 years ago with a cost of $50,000. The market value as of this date is $75,000.
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- Tree Lovers Inc. purchased 100 acres of woodland in which the company intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $2,100,000 for the land. Tree Lovers will sell the lumber as it is harvested and expects to deplete it over five years (twenty acres in year one, thirty acres in year two, twenty-five acres in year three, fifteen acres in year four, and ten acres in year five). Calculate the depletion expense for the next five years and create the journal entry for year one.Tree Lovers Inc. purchased 2,500 acres of woodland in which it intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $5,000,000 for the land. Tree Lovers will sell the lumber as it is harvested and it expects to deplete it over ten years (150 acres in year one, 300 acres in year two, 250 acres in year three, 150 acres in year four, and 100 acres in year five). Calculate the depletion expense for the next five years and create the journal entry for year one.Bob the Builder purchased a land and building in Year 6 for $4,000,000. $1.6 million of the purchase price was allocated to the land, and the balance to the building. At the time of the purchase it was estimated that the building would have a useful life of 40 years but no residual value. In Year 17, Bob exchanged the land and building for a piece of undeveloped land. Bob also received $100,000 cash to make up the difference in the fair values of the assets exchanged. The fair market value of the assets given up was estimated to be $6.2 million; the fair value of the land to be received was $6.1 million. Bob depreciates his buildings using the straight-line method. Bob records a full year of depreciation expense in the year of acquisition and no depreciation expense in the year of disposal. (1) Prepare the journal entry to record the exchange of the asset in Year 17 for Bob the Builder, assuming that the transaction has commercial substance (general case). (2) Prepare the journal entry…
- The company has recieved a donation of land from a rich local philanhropist. the land originally cost the philanhropist $48,000. on the date of the donation, it had a market value of $111,000. Make the journal entry necessary on the book of the company to record the receipt of the landOn May 1, Jack Costanza paid $100,000 for a residential rental property. This purchase price represents $80,000 for the cost of the building and $20,000 for the cost of the land. Nine years and five months later, on October 1, he sold the property for $130,000. Compute the MACRS depreciation for each of the 10 calendar years during which he owned the property.Silver Company purchased a machine for use in the business. The purchase price was $55,000 and the related sales tax totaled $500. Sliver paid $1,000 to have the machine delivered to its factory and $2,000 to have it assembled. Over the five-year life of the machine, maintenance cost of $800 will be incurred annually. What is the capitalized cost of this asset? Manning Company purchased a factory for $120,000. The factory included land, a building, and equipment. The land contributes 40.8%, the building contributes 49.6%, and the equipment contributes 9.6% of the factory’s value. How much of the cost should be assigned to the building? On January 1, Year 1, the Starshina Company paid $25,000 for a photocopier with an estimated useful life of 4 years, and an estimated residual value of $5,000. The company uses the straight-line method. What is the amount of depreciation expense for Year 2?
- John’s uncle donated a truck to his company, John’s Corporation. The truck had an original cost of $95,000, a book value of $40,000, and a fair value of $55,000. The journal entry by John’s Corporation to record this donated asset will include a a. debit Truck for $60,000 and credit Gain for $20,000. b. debit Truck for $55,000 and credit Gain for $55,000. c. debit Truck for $95,000 and credit Gain for $95,000. d. debit Truck for $60,000 and credit Gain for $60,000.Ken sold a rental property for $608,000. He received $140,000 in the current year and $117,000 each year for the next four years. Of the sales price, $422,500 was allocated to the building, and the remaining $185,500 was allocated to the land. Ken purchased the property several years ago for $479,500. When he initially purchased the property, he allocated $337,500 of the purchase price to the building and $142,000 to the land. Ken has claimed $23,500 of depreciation deductions over the years against the building. Ken had no other sales of §1231 or capital assets in the current year. Required: a. For the year of the sale, determine Ken's recognized gain or loss. b. For the year of the sale, determine character of Ken's gain, and calculate Ken's tax due because of the sale (assuming his marginal ordinary tax rate is 32 percent). Required A Required B For the year of the sale, determine Ken's recognized gain or loss. Note: Round your final answers to the nearest whole dollar amount. Input…Assume that in January 20X6, a Hotcake House restaurant purchased a building, paying $57,000 cash and signing a $108,000 note payable. The restaurant paid another $60,000 to remodel the bui and fixtures cost $54,000, and dishes and supplies-a current asset-were obtained for $10,200. Hotcake House is depreciating the building over 20 years by the straight-line method, with estimate value of $55,000 The fumiture and fixtures will be replaced at the end of five years and are being depreciated by the double-declining-balance method, with zero residual value. At the end of the first restaurant still has dishes and supplies worth $1,900. Requirement 1. Show what the restaurant will report for supplies, PPE, and cash flows at the end of the first year on its. • Income Statement • Balance Sheet • Statement of Cash Flows (investing only) Note The purchase of dishes and supplies is an operating cash flow because supplies are a current asset. Requirement 1. Show what the restaurant will report…
- On November 10 of year 1 Javier purchased a building, including the land it was on, to assemble his new equipment. The total cost of the purchase was $1,300,000; 15% was allocated to the basis of the land and the remaining 85% was allocated to the basis of the building. Using MACRS, what is Javier’s depreciation expense on the building for year 2? On March 25 of year 1 Javier purchased an apartment building, including the land it was on. The total cost of the purchase was $1,300,000; 10% was allocated to the basis of the land and the remaining 90% was allocated to the basis of the building. Using MACRS, what is Javier’s depreciation expense on the building for year 3?Pink Corp. purchased a piece of land in 2022 for $1,000,000 and incurred the following additional costs: cost of clear the land, $ 36,000; cost of paving a new parking lot, $48, 000; cost of lighting for the new parking lot, $24,000. In addition to these costs, Pink Corp was able to sell the timber from clearing the land for $7,000. How much should Pink record in the Land and Land Improvement accounts for this purchase? Select one: a. Land: $1,036,000; Land Improvements: $72, 000 b. Land: $993,000; Land Improvements: $108, 000 c. Land: $1, 103,000; Land Improvements: $0 d. Land: $1,000,000; Land Improvements: $ 108,000 e. Land: $1,029,000; Land Improvements: $72,000Yager Corporation purchased residential real estate several years ago for $225,000, of which $50,000 was allocated to the land and $175,000 was allocated to the building. Yager took straight-line MACRS deductions of $40,000 during the years it held the property. In the current year, Yager sells the property for $275,000, of which $55,000 is allocated to the land and $220,000 is allocated to the building. Requirement What are the amount and character of Yager's recognized gain or loss on the sale? Begin by computing the gain or loss on sale. Select the formula and then enter the amounts and compute the gain or loss on the sale for the land, building and for the total Land Building Total Recognized gain Next, determine the character of the gain or loss on sale of the land and building. (Complete all input fields. For items with a 0 balance, make sure to enter a 0 in the appropriate cell.) Building Total Land Recognized gain or loss