LB Corporation purchased a business car in June 2022 for $62,000. The car weighs 4,000 pounds and will be used 100 percent of the time in the business. Compute the largest depreciation deduction possible in 2022 and 2023. No other property purchases were made during the year. (Consider bonus depreciation and the Section 179 deduction, if applicable.)
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- Hunter Company purchased a light truck on January 2, 2019 for 18,000. The truck, which will be used for deliveries, has the following characteristics: Estimated life: 5 years Estimated residual value: 3,000 Depreciation method for financial statements: straight-line method Depreciation for income tax purposes: MACRS (3-year life) From 2019 through 2023, each year, Hunter had sales of 100,000, cost of goods sold of 60,000, and operating expenses (excluding depreciation) of 15,000. The truck was disposed of on December 31, 2023, for 2,000. Required: 1. Prepare an income statement for financial reporting through pretax accounting income for each of the 5 years, 2019 through 2023. 2. Prepare, instead, an income statement for income tax purposes through taxable income for each of the 5 years, 2019 through 2023. 3. Compare the total income for all 5 years under Requirements 1 and 2.In 2019, Mary sells for $24,000 a machine used in her business. The machine was purchased on May 1,2017, at a cost of $22,000. Mary has deducted depreciation on the machine of $6,000. What is the amount and nature of Mary's gain as a result of the sale of the machine? $2,000 Section 1231 gain $8,000 ordinary income under Section 1245 $6,000 ordinary income and $2,000 Section 1231 gain $6,000 Section 1231 gain and $2,000 ordinary income under Section 1245 None of the aboveIn March 2022, Jones Company purchased a Mercedes for use in its business at a cost of $73,000. Required: Assuming no bonus depreciation or Section 179 deduction, calculate the allowable tax depreciation on this asset for 2022, 2023, and 2024. Use Table 7-1 and Table 7-2. Use the below table for annual depreciation deduction for year 2022 to 2025: 2022 2023 2024 2025 and subsequent years 2022 depreciation 2023 depreciation 2024 depreciation Amount $ 11,200 18,000 10,800 6,460
- Taylor LLC purchased an automobile for $55,000 on July 5, 2020. What is Taylor's maximum depreciation deduction for 2020 (including bonus depreciation) if its business use percentage is 100 percent? $10,100 $11,000 $18,100 $55,000 None of the choices are correct.On April 1, 2024, Titan Corporation purchases office equipment for $75,000. For tax reporting, the company uses MACRS and classifies the equipment as five-year personal property. In 2024, this type of equipment is eligible for 60% first-year bonus depreciation. For financial reporting, the company uses straight-line depreciation. Assume the equipment has no residual value. Required: 1. Calculate annual depreciation for the five-year life of the equipment according to MACRS. The company uses the half-year convention for tax reporting purposes. 2. Calculate annual depreciation for the five-year life of the equipment according to straight-line depreciation. The company uses partial-year depreciation based on the number of months the asset is in service for financial reporting purposes. 3. In which year(s) is tax depreciation greater than financial reporting depreciation? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate annual…Turtle Corporation is a calendar year C Corporation formed in 2017. Turtle purchased a motel property in June 2020 for $11,000,000. The motel land value represented $2,500,000 of the $11,000,000 purchase price. What is the allowable depreciation deductions on the hotel for 2020 and 2021? A. $118,235 in 2020 and $217,940 in 2021 B. $153,010 in 2020 and $282,040 in 2021 C. $167,450 in 2020 and $309.060 in 2021 D. $309,060 in 2020 and $167,450 in 2021
- 31. On January 1, 2019, Jacob Inc. purchased a commercial truck for $48,000 and uses the straight-line depreciation method. The truck has a useful life of eight years and an estimated residual value of $8,000. On December 31, 2021, Jacob Inc. sold the truck for $30,000. What amount of gain or loss should Jacob Inc. record on December 31, 2021? A. B. C. D. Gain, $22,000. Loss, $18,000. Gain, $5,000. Loss, $3,000.On April 1, 2024, Titan Corporation purchases office equipment for $74,000. For tax reporting, the company uses MACRS and classifies the equipment as 5-year personal property. In 2024, this type of equipment is eligible for 60% first-year bonus depreciation. For financial reporting, the company uses straight-line depreciation. Assume the equipment has no residual value. Required: Calculate annual depreciation for the five-year life of the equipment according to MACRS. The company uses the half-year convention for tax reporting purposes. Calculate annual depreciation for the five-year life of the equipment according to straight-line depreciation. The company uses partial-year depreciation based on the number of months the asset is in service for financial reporting purposes. In which year(s) is tax depreciation greater than financial reporting depreciation 2. Year Depreciation 2024 2025 2026 2027 2028 2029 Total $0 1. Year Depreciation Basis…Futabatei Enterprises purchased a delivery truck on January 1, 2020, at a cost of $27,000. The truck has a useful life of 7 years with an estimated salvage value of $6,000. The straight-line method is used for book purposes. For tax purposes, the truck, having an MACRS class life of 7 years, is classified as 5-year property; the optional MACRS tax rate tables are used to compute depreciation. In addition, assume that for 2020 and 2021 the company has revenues of $200,000 and operating expenses (excluding depreciation) of $130,000. Instructions a. Prepare income statements for 2020 and 2021. (The final amount reported on the income statement should be income before income taxes.) b. Compute taxable income for 2020 and 2021. c. Determine the total depreciation to be taken over the useful life of the delivery truck for both book and tax purposes. d. Explain why depreciation for book and tax purposes will generally be different over the useful life of a depreciable asset.
- On April 1, 2024, Titan Corporation purchases office equipment for $50,000. For tax reporting, the company uses MACRS and classifies the equipment as 5-year personal property. In 2024, this type of equipment is eligible for 60% first-year bonus depreciation. For financial reporting, the company uses straight-line depreciation. Assume the equipment has no residual value.Required: Calculate annual depreciation for the five-year life of the equipment according to MACRS. The company uses the half-year convention for tax reporting purposes.Calculate annual depreciation for the five-year life of the equipment according to straight-line depreciation. The company uses partial-year depreciation based on the number of months the asset is in service for financial reporting purposes. In which year(s) is tax depreciation greater than financial reporting depreciation?3. Gina Corporation purchases new office equipment for $2,500,000 on January 1, 2020. Gina estimates that the equipment has a $100,000 residual value and a useful life of 6 years. Gina uses the straight-line method to record depreciation. Assume that on January 1, 2023, after three years, Gina estimates that the equipment's remaining useful life is 8 years and residual value is $60,000. A depreciation schedule would show depreciation expense for 2023. a. $155,000 b. $221,818 c. $248,000 d. $305,000 e. $400,0007. Mr. Y acquired his business' building with a 10-year useful life on October 1, 2010. As of December 31, 2018, the carrying value of the buiding is P1,040,000. The building can be sold at the estimated value of P200,000 at the end of its useful life. Based on the given data, what is the cost of the Building acquired by Mr. Y? *