Jessica purchased a home on January 1, 2018 for $580,000 by making a down payment of $230,000 and financing the remaining $350,000 with a 30-year loan, secured by the residence, at 6 percent. During 2018 and 2019, Jessica made interest-only payments on this loan of $21,000 (each year). On July 1, 2018, when her home was worth $580,000 Jessica borrowed an additional $145,000 secured by the home at an interest rate of 8 percent. During 2018, she made interest-only payments on the second loan in the amount of $5,800. During 2019, she made interest only on the second loan in the amount of $11,600. What is the maximum amount of the $32,600 interest expense Jessica paid during 2019 may she deduct as an itemized deduction if she used the proceeds of the second loan to finish the basement in her home and landscape her yard? (Assume not married filing separately.)
$0. $11,600. $30,682. $7,200. $32,600.
In: Accounting
1. What is the net change (net purchase or sale) in Property, Plant and Equipment account in 2018 given the following information?
2017 Net Property, Plant and Equipment Balance = 14,300,000
2018 Net Property, Plant and Equipment Balance = 12,850,000
2018 Total Accumulated Depreciation Balance = 5,650,000
2018 Depreciation Expense = 1,150,000
Group of answer choices
a. 1,450,000 net purchase
b. 1,450,000 net sale
c. 300,000 net purchase
d. 300,000 net sale
2. Using the balance sheet accounts below, what is the firm's Long Term Debt Ratio?
Cash = 12,300,000
Accounts Receivable = 6,700,000
Inventory = 5,000,000
Fixed Assets = 21,000,000
Current Portion of Long Term Debt = 3,900,000
Accounts Payable = 1,700,000
Long Term Bonds = 29,000,000
Common Stock = 6,000,000
Retained Earnings = 4,400,000
Group of answer choices
a. 73.60%
b. 76.89%
c. 75.98%
d. 64.44%
In: Finance
1Several years ago Polar Inc. acquired an 80% interest in Icecap Co. The book values of Icecap's asset and liability accounts at that time were considered to be equal to their fair values. Polar’s acquisition value corresponded to the underlying book value of Icecap so that no allocations or goodwill resulted from the transfer.
The following selected account balances were from the individual financial records of these two companies as of December 31, 2018:
| Polar | Icecap | |
| Inc. | Co. | |
| Sales | $896,000 | $504,000 |
| cost of goods sold | 406,000 | 276,000 |
| Operating expenses | 210,000 | 147,000 |
| Retained earnings,1/1/18 | 1,036,000 | 252,000 |
| Inventory | 484,000 | 154,000 |
| Builidings(net) | 501,000 | 220,000 |
| Investment income | not given |
1. Assume that Polar sold inventory to Icecap at a markup equal to 25% of cost. Intra-entity transfers were $130,000 in 2017 and $165,000 in 2018. Of this inventory, $39,000 of the 2017 transfers were retained and then sold by Icecap in 2018, while $55,000 of the 2018 transfers was held until 2019.
Required:
For the consolidated financial statements for 2018, determine the balances that would appear for the following accounts: (i) Cost of Goods Sold; (ii) Inventory; and (iii) Net income attributable to the noncontrolling interest.
2.
Polar sold a building to Icecap on January 1, 2017 for $112,000, although the book value of this asset was only $70,000 on that date. The building had a five-year remaining useful life and was to be depreciated using the straight-line method with no salvage value.
Required:
For the consolidated financial statements for 2018, determine the balances that would appear for the following accounts: (i) Buildings (net); (ii) Operating expenses; and (iii) Net income attributable to the noncontrolling interest.
1Several years ago Polar Inc. acquired an 80% interest in Icecap Co. The book values of Icecap's asset and liability accounts at that time were considered to be equal to their fair values. Polar’s acquisition value corresponded to the underlying book value of Icecap so that no allocations or goodwill resulted from the transfer.
The following selected account balances were from the individual financial records of these two companies as of December 31, 2018:
| Polar | Icecap | |
| Inc. | Co. | |
| Sales | $896,000 | $504,000 |
| cost of goods sold | 406,000 | 276,000 |
| Operating expenses | 210,000 | 147,000 |
| Retained earnings,1/1/18 | 1,036,000 | 252,000 |
| Inventory | 484,000 | 154,000 |
| Builidings(net) | 501,000 | 220,000 |
| Investment income | not given |
1. Assume that Polar sold inventory to Icecap at a markup equal to 25% of cost. Intra-entity transfers were $130,000 in 2017 and $165,000 in 2018. Of this inventory, $39,000 of the 2017 transfers were retained and then sold by Icecap in 2018, while $55,000 of the 2018 transfers was held until 2019.
Required:
For the consolidated financial statements for 2018, determine the balances that would appear for the following accounts: (i) Cost of Goods Sold; (ii) Inventory; and (iii) Net income attributable to the noncontrolling interest.
2.
Polar sold a building to Icecap on January 1, 2017 for $112,000, although the book value of this asset was only $70,000 on that date. The building had a five-year remaining useful life and was to be depreciated using the straight-line method with no salvage value.
Required:
For the consolidated financial statements for 2018, determine the balances that would appear for the following accounts: (i) Buildings (net); (ii) Operating expenses; and (iii) Net income attributable to the noncontrolling interest.
In: Accounting
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