Question
In: Accounting
ABC Inc. purchased machinery and equipment in the amount of $125,000 on January 1, 2019. ABC...
ABC Inc. purchased machinery and equipment in the amount of $125,000 on January 1, 2019. ABC will amortize this asset straight line over 18 years, with no salvage value. For tax purposes these assets are to be depreciated using a capital cost allowance rate of 15% each year of the original value (i.e. $125,000). ABC pays tax at a rate of 35%.(reminder of half-net year rule).
Required:
a) What is the amount of the temporary difference between straight line depreciation and capital cost allowance on December 31, 2019? (1 mark)
b) What would the amount be as of December 31, 2019 for any Deferred Tax Asset / Liability? Be sure to specify whether it is an asset or liability. (1 mark)
c) What would the amount be as of December 31, 2020 for any Deferred Tax Asset / Liability? Be sure to specify whether it is an asset or liability. (1 mark)
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Thanks,
ekkarill92 answered 2 years agoRelated Solutions
A business purchased equipment for $ 125 comma 000$125,000 on January? 1, 2019. The equipment will...
A business purchased equipment for
$ 125 comma 000$125,000
on January? 1, 2019. The equipment will be depreciated over the
five years of its estimated useful life using the
straightminus?line
depreciation method. The business records depreciation once a
year on December 31. Which of the following is the adjusting entry
required to record depreciation on the equipment for the year?
2019? (Assume the residual value of the acquired equipment to be?
zero.)??
A.
Debit
$ 125 comma 000$125,000
to Depreciation...
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expense reported on the equipment for 2019 was $10,734. During 2020,
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units-of-production depreciation method to depreciate the equipment.
Calculate...
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The error was discovered on December 10, 2022. ABC is subject to a
30% tax rate.
What is the adjustment to retained earnings at January
1, 2022?
1) ABC Co. purchased machinery that cost $200,000 on January 1, 2018. The entire cost was...
1) ABC Co. purchased machinery that cost $200,000 on
January 1, 2018. The entire cost was recorded as an expense. The
machinery has a nine-year life and a $10,000 residual value. The
error was discovered on December 20, 2021. Ignore income tax
considerations.
ABC’s income statement for the year ended December 31,
2021, should show depreciation expense
of
_______
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$20,000 on the date of purchase and a promissory note requiring
payment of $10,000 on each December 31 for the next three years
(December 31, 2019, to December 31, 2021). Bay is pleased that no
interest is charged on the note since its bank would have charged
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The equipment arrived on January 5, 2019,...
On January 1st, 2019, ABC Inc. purchased a copper mine for $400,000. The company is required...
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the land on which the mine is located to its initial condition at
the end of the mine's ten year useful life. Restoration costs are
estimated to be $35,000. ABC is subject to an interest rate of 5%.
ABC Inc uses straight line deprecation and follows
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Required
Prepare the journal entries required on January 1st and
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On January 1, 2019, Happy Company purchased equipment for $114,000. The equipment was assigned a useful...
On January 1, 2019, Happy Company purchased equipment for
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On January 1, 2023, Happy Company revised the life of the
equipment from 15 to 20 years.
On January 1, 2026, Happy Company revised the life of the
equipment from 20 to 12 years.
On January 1, 2028, Happy Company spent $58,000 to overhaul...
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On January 1, 2019, Happy Company purchased equipment for
$114,000. The equipment was assigned a useful life of 15 years and
a $6,000 residual value. Happy Company will use the straight-line
method to depreciate the equipment. On January 1, 2023, Happy
Company revised the life of the equipment from 15 to 20 years. On
January 1, 2026, Happy Company revised the life of the equipment
from 20 to 12 years. On January 1, 2028, Happy Company spent
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Hoover Corporation purchased equipment on January 1, 2019, for $610,000. In 2019 and 2020, Hoover depreciated...
Hoover Corporation purchased equipment on January 1, 2019, for
$610,000. In 2019 and 2020, Hoover depreciated the asset on a
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c)100,000
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