urchased a building for $250,000 for his business. Before beginning to use the property in , the Taxpayer replaced the old air conditioning system with a new one at a cost of addition, he removed the doors and windows and installed new doors and windows at a 0,000. Similarly, he hired a landscape gardener who changed the green areas around the ith an investment of $3,000. Ultimately, the building was painted at a cost of $5,000. the starting base. :
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- In janaruary, Prahbu purchased a new machine for use in the existing production line of his manufacturing business for $90,000. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $2,500 to install the machine, and after the machine is installed, he pays $1,300 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete and prahbu places the machine in service on the production line. On December 3, prahbu pays another $3,300 to perform periodic qaulity testing after the machine is placed in service. . How much will prahbu be required to capitalize as the cost of the machine.?Mr. Smith acquired a property consisting of one acre of land and a two-story building five years ago for $100,000. He also obtained an $80,000 mortgage loan from ACE Bank to provide financing to complete the purchase. This year, Mr. Smith constructed another building on the property with his own funds at a cost of $20,000. Mr. Smith has decided after completing the building to approach Duce Bank to borrow and mortgage the new building with a $16,000 loan. Is Duce Bank likely to provide the $16,000 in financing? What other options may Mr. Smith have to consider?Mr. Charles owns a private garbage dump. He has been asked that to avoid leaks that contaminate the groundwater, he must install a plastic protector. The landfill area is 7 km2 and the cost of handling the vapors is $ 1,000 per km2 and is paid for all land use. The installation cost of the protector is known to be $ 2,000,000. To recoup the investment in 5 years, Mr. Charles charged $ 50 for the delivery truck loads, $ 100 for the dump truck loads, and $ 200 for the compactor truck loads. It is also known that the monthly distribution has been estimated at 1,000 delivery truck loads, 200 dump truck loads and 500 compactor truck loads. a) What internal rate of return did Mr. Charles obtain on his investment? to. Effective monthly and Effective annually b) If the minimum attractive rate of return is 8% annual compound monthly cash for Mr. Charles's businesses, what can you recommend in this regard, support your answers?
- Emily purchased a building to store inventory for her business. The purchase price was $760,000. Beyond this, Emily incurred the following necessary expenses to get the building ready for use: $10,000 to repair the roof as routine maintenance (did not improve or prolong the life of the asset), $6,000 to make the interior suitable for her finished goods, and $400 in legal fees. What is Emily’s cost basis in the new building? Meg O’Brien received a gift of some small-scale jewelry manufacturing equipment that her father had used for personal purposes for many years. Her father originally purchased the equipment for $1,700. Because the equipment is out of production and no longer available, the property is currently worth $4,000. Meg has decided to begin a new jewelry manufacturing trade or business. What is her depreciable basis for depreciating the equipment?When Erik's son went to college, he purchased a property for his son near campus for $100,000. At the time, the property tax assessment allocated 10% of the property value to the land. After his son graduated, Erik decided to keep the house for use as a rental. The fair market value at the time of the conversion was $150,000, but now the tax assessment allocated 35% to land value. The basis for depreciation of the house is $90,000 $97,500 $100,000 $150,000in the new building? 40. In January, Prahbu purchased for $90,000 a new machine for use in an existing production line of his manufacturing business. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $2,500 to install the machine, and after the machine is installed, he pays $1,300 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete, and Prahbu places the machine in service on the production line. On December 3, Prahbu pays another $3,300 to perform periodic quality control testing after the machine is placed in service. How much will Prahbu be required to capitalize as the cost of the machine? Donn 11 LO 2-1 resear
- Last year, Jose and Josefina Munoz bought a home with a dwelling replacement value of $250,000 and insured it (via an HO-5 policy) for $225,000. The policy reimburses actual cash value and has a $500 deductible, standard limits for coverage C items, and no scheduled property. Recently, burglars broke into the house and stole a new computer with a current replacement value of $1,500 and an estimated useful life of three years. They also took jewelry valued at $2,500 and a coin collection valued at $1,500. If the Munozs’ policy has a 90 percent co-insurance clause, do they have enough insurance? Assuming a 50 percent coverage C limit, calculate how much the Munoz family would receive if they filed a claim for the stolen items. What advice would you give the Munoz family about their homeowner’s coverage?The taxpayers Mr Grieve and his wife purchased a rundown farming property of 216 acres for $33,000 in 1969. They formed a partnership with the intention of carrying on a farming business. When they acquired the land, it was not in a suitable condition for farming as the land was heavily infested with gorse, the pastures had deteriorated and the fencing was not in place. They had problems to improve the land because it was surrounded by a forestry area and a wine yard. Mr Grieve put lots of efforts to improve the land slowly and established a Hereford stud herd (of a modest size in 1980 with the intention to bring some profit to them. He worked full-time in the farm and his son joined him as full-time worker from 1975 to 1977. The partnership had made losses from 1972 to 1977. However, only losses from 1972 to 1975 were allowed to be offset against their other income. The Commissioner disallowed the losses in 1976 and 1977 as they said the taxpayers were not carrying on a business in…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 $3,000,000 for the land. Tree Lovers will sell the lumber as it is harvested and expects to deplete it over five years (23 acres in year one, 30 acres in year two, 24 acres in year three, 10 acres in year four, and 13 acres in year five). Calculate the depletion expense for the next five years. Year 1 $ Year 2 Year 3 $ Year 4 Year 5 Prepare the journal entry for year one. If an amount box does not require an entry, leave it blank. %24 %24 %24 %24 %24
- Peter and Shaline Johnsen moved into a home in a new subdivision. Theirs was one of the first homes in the subdivision. During the year, they paid $1,500 in real property taxes to the state government, $500 to the developer of the subdivision for an assessment to pay for the sidewalks, and $900 for real property taxes on land they hold as an investment. What amount of property taxes are the Johnsens allowed to deduct assuming their itemized deductions exceed the standard deduction amount before considering any property tax deductions and they pay $5,000 of state income taxes for the year and no other deductible taxes? Deductible property taxes amountThe Blowing Rock Partnership purchased land for $1,200,000 with plans to build a spa on the site. The partnership tore down several buildings on the property for $20,000. Salvaged materials with a cost of $6,000 will be repurposed in the spa. Trees were removed for $5,000 and drainage was added for $30,000. The area was fenced for $41,000. A preliminary consultation with an architect cost $2,500 and legal fees of $3,200 were paid in connection with changing the zoning of the property. What accounts will be debited for these costs? O Land, $1,249,000; Land Improvements, $41,000; Building, $5,700 O Land, $1,235,000; Land Improvements, $55,000; Architect Expense, $2,500,000; Legal Expense, $3,200 Land, $1,255,000; Land Improvements, $41,000; Building, $11,700 O Land, $1,249,000; Land Improvements, $41,000; Building, $2,500; Legal Expense, $3,200A company purchased a new forging machine to manufacture disks for airplane turbine engines. The new press costs $3,800,000, and it falls into the seven-year MACRS property class. The company has to pay property taxes to the local township for ownership of this forging machine at a rate of 1.2% on the beginning book value of each year.(a) Determine the book value of the asset at the beginning of each tax year.(b) Determine the amount of property taxes over the machine's depreciable life.
