PRINCIPLES OF TAXATION F/BUS.+INVEST.
22nd Edition
ISBN: 9781259917097
Author: Jones
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 8IRP
To determine
Frame questions from the given situations of tax issue/issues.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On January 2, 2011, Blink Corporation was granted 5,000 acres of land in a village, located near the slums outside city limits, by a local government authority. The condition attached to this grant was that Blink Corporation should clean up this land and lay roads by employing laborers from the village in which the land is located. The government has fix the minimum wage payable to the workers. The entire operation will take three years and is estimated to cost P100,000,000. This amount will be spent in this way, P20,000,000 each in the first, P30,000,000 in the second years and P50,000,000 in the third year. The fair value of the land is currently P120,000,000.
What portion of the grant is recognized for the year ended December 31, 2012?
Entity A is a local construction company, which provides construction services to different types of customers.
On 16 December 2017, Entity A ordered a concrete plant from Entity B. The listed price of the plant is $680,000 for general customers. Entity B offers a 15% trade discount to Entity A because it is one of its loyal customers.
According to the local environmental protection regulation, Entity A is required to remove the concrete plant at the end of the reporting period of 2022. The removal cost of $5,100 and the plant residual value of $4,013 was estimated at the inception of the contract respectively.
The plant was delivered to Entity A on 1 January 2018. According to the contract, Entity B provides a 2-month credit period to Entity A. Finally, Entity A fully settled the outstanding amount on 1 February 2018.
Installation and testing services are required to make the plant ready for use. On 1 January 2018, Entity C, the installation and testing service provider…
Ocean Corp.'s comprehensive insurance policy allows its assets to be replaced at current value. The policy has a $50,000 deductible clause. One
of Ocean's waterfront warehouses was destroyed in a winter storm. Such storms occur approximately every four years. Ocean incurred $20,000 of
costs in dismantling the warehouse and plans to replace it. The tax rate is 30%. The following data relate to the warehouse:
Current carrying amount $300,000
Replacement cost
Under U.S. GAAP, what amount of gain should Ocean report as a separate component of income from continuing operations?
1,100,000
Chapter 1 Solutions
PRINCIPLES OF TAXATION F/BUS.+INVEST.
Ch. 1 - Prob. 1QPDCh. 1 - Prob. 2QPDCh. 1 - Prob. 3QPDCh. 1 - Mr. P owns a residential apartment complex in a...Ch. 1 - Prob. 5QPDCh. 1 - A local government imposed a new 2 percent tax on...Ch. 1 - Prob. 7QPDCh. 1 - Prob. 8QPDCh. 1 - Prob. 9QPDCh. 1 - Prob. 10QPD
Ch. 1 - Prob. 11QPDCh. 1 - Prob. 12QPDCh. 1 - Prob. 13QPDCh. 1 - Prob. 14QPDCh. 1 - One way for the federal government to increase tax...Ch. 1 - The Internal Revenue Code and Treasury regulations...Ch. 1 - Prob. 1APCh. 1 - Prob. 2APCh. 1 - Prob. 3APCh. 1 - This year, State A raised revenues by increasing...Ch. 1 - Prob. 5APCh. 1 - Prob. 6APCh. 1 - Prob. 7APCh. 1 - Prob. 8APCh. 1 - Prob. 9APCh. 1 - Prob. 10APCh. 1 - Prob. 11APCh. 1 - Prob. 12APCh. 1 - Prob. 13APCh. 1 - Prob. 14APCh. 1 - Prob. 15APCh. 1 - Prob. 1IRPCh. 1 - Prob. 2IRPCh. 1 - Prob. 3IRPCh. 1 - Prob. 4IRPCh. 1 - Prob. 5IRPCh. 1 - Acme Corporation was formed under the laws of...Ch. 1 - Prob. 7IRPCh. 1 - Prob. 8IRPCh. 1 - Prob. 9IRPCh. 1 - Prob. 10IRPCh. 1 - Prob. 1TPCCh. 1 - KTR Company earns a 10 profit on each unit of...
Knowledge Booster
Similar questions
- Ocean Corp.'s comprehensive insurance policy allows its assets to be replaced at current value. The policy has a $50,000 deductible clause. One of Ocean's waterfront warehouses was destroyed in a winter storm. Such storms occur approximately every four years. Ocean incurred $20,000 of costs in dismantling the warehouse and plans to replace it. The tax rate is 30%. The following data relate to the warehouse: Current carrying amount $300,000 Replacement cost $ 1,100,000 Under U.S. GAAP, what amount of gain should Ocean report as a separate component of income from continuing operations ? Please answer fastarrow_forwardAt the beginning of current year, Zamba Company announced the decision to close the factory located inZamboanga and terminate all 150 employees as a result of economic downturn.The entity shall pay P30,000 per employee upon termination.However, to ensure that the windup of the factory occurs smoothly and all remaining customer orders arecompleted, the entity needs to retain some employees until closure of the factory in nine months.As a result, the entity announced that employees who agree to stay until the closing of the factory shallreceive P80,000 payment at the end of nine months in addition to receiving their current wage throughoutthe period of closure instead of the P30,000.Based on this offer, the entity expected to retain 20 employees until the factory is closed.REQUIRED:12. Compute the total benefit under the termination plan.13. Compute the amount of termination benefit.14. Compute the amount of short-term benefit.arrow_forwardBright Co. received a government grant of 10,000,000 to install and run a windmill in an economically backward area. The entity had estimated that such a windmill would cost 25,000,000 to construct. The secondary condition attached to the grant is that the entity shall hire labor in the area where the windmill is located. The construction was completed on January 1, 2014. The windmill is to be depreciated using the straight-line method over a period of 10 years. What amount of grant income should be recognized for 2014? O2,500,000 1,500,000 O 1,000,000 5,000,000arrow_forward
- Bramble's Steelers Inc. (BSI) is a steel manufacturing company located in Ontario. On November 1, 2021, BSI acquired land on which it constructed a facility for steel manufacturing purposes. Since its manufacturing process produces excessive waste, the government of Ontario has imposed a requirement for BSI to clean up property. As part of its agreement with the province of Ontario, BSI is allowed to operate on this site for only 15 years after which time BSI estimates it will need to incur $2,000,000 to clean up the site. Bramble went ahead with the construction of the building and recognized the asset retirement obligation at that time. The company's discount rate is 4% and BSI reports under IFRS with a December 31 year-end. (a) What adjusting journal entry should BSI have made to initially recognize the ARO under IFRS? (For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 0.52750 and round final answer to 0 decimal places, e.g. 5,275. Credit…arrow_forwardhe City of Raylan has a rather large warehouse that it no longer needs. The city had previously used the warehouse to store supplies and equipment for the school system, police department, and other public service functions. It has a remaining expected life of 18 years with no expected residual value. On January 1, 2020, the warehouse has a net book value of $1.4 million. On that date, city officials agree to lease the property to Acme International for its remaining life. Both parties agree to an implicit interest rate of 12 percent. The first payment is to be made immediately and on each subsequent January 1. The straight-line method is used where an allocation method is required. Assume that the present value of an annuity due of $1 at a 12 percent annual rate for 18 periods is 8.11963. Based on that assumption, what amount does the City of Raylan charge Acme each period? Assume the annual payments are properly calculated as $172,400 based on the information provided. What journal…arrow_forwardOn June 1, 2025, Oriole Company sells $185,000 of shelving units to a local retailer, Blue Spruce, which is planning to expand its stores in the area. Under the agreement, Blue Spruce asks Oriole to retain the shelving units at its factory until the new stores are ready for installation. Title passes to Blue Spruce at the time the agreement is signed. The shelving units are delivered to the stores on September 1, 2025, and Blue Spruce pays in full. Prepare the journal entries for this bill-and-hold arrangement (assuming that conditions for recognizing the sale as a bill-and-hold sale have been met) for Oriole on June 1 and September 1, 2025. The cost of the shelving units to Oriole is $89,000. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the…arrow_forward
- In April, F. W. Lang Company purchased an ice cream freezer and refrigeration compressor unit from Fleet for $2,160. Although the parties agreed to a written installment contract providing for an $850 down payment and eighteen installment payments, Lang made only one $200 payment upon receipt of the goods. One year later, Lang moved to a new location and took the equipment along without notifying Fleet. Two years after the sale, Lang disconnected the compressor from the freezer and used it to operate an air conditioner. Lang continued to use the compressor for that purpose until the sheriff seized the equipment and returned it to Fleet pursuant to a court order. Fleet then sold the equipment for $500 in what both parties conceded was a fair sale. Lang then brought an action charging that the equipment was defective and unusable for its intended purpose and sought to recover the down payment and expenses incurred in repairing the equipment. Fleet counterclaimed for the balance due under…arrow_forwardAs a result of a recent acquisition, PT ABC plans to close a factory in 10 months and, at that time, terminate employment of all of the remaining employees at the factory. Because PT ABC needs the expertise of the employees at the factory to complete some contracts, it announce a plan of termination as follows. Each employee who stand and renders service until the closure of the factory will receive on the termination date a cash payment of $50,000, employees leaving before the closure of the factory will receive $ 20,000. There are 1,200 employees at the factory . At the time of the announcing the plan, PT ABC expects 200 of them to leave before the closure Required :Determine the amount of termination benefits and short term employee benefit in accordance with IAS 19 Employee Benefits?arrow_forwardA village recently completed the construction of a new water tower. The entire cost of the water tower was $948,000, and the government paid $360,000 of the total cost through the awarding of a grant. In addition, the village can delay paying the balance of the cost for 40 years (without paying any interest during the 40 years). To finance the balance, the village board will at this time assess its 511 homeowners a one-time flat fee surcharge and then invest this money in a 40-year CD paying 7.1% interest compounded monthly. Complete parts (a) through (c) below. a) What is the balance due on the water tower? $ b) How much will the village need to invest at this time to raise the balance due in 40 years? (Round to the nearest cent as needed.) $ c) What amount should each homeowner pay as a surcharge? $arrow_forward
- Several years ago Velvet Company purchased a small building adjacent to its manufacturing plant in order to have room for expansion when needed. Since the company had no immediate need for the extra space, the building was rented out to another company for rental revenue of $40,000 per year. The renter’s lease will expire next month, and rather than renewing the lease, Velvet Company has decided to use the building itself to manufacture a new product. Direct materials cost for the new product will total $40 per unit. It will be necessary to hire a supervisor to oversee production. Her salary will be $2,500 per month. Workers will be hired to manufacture the new product, with direct labor cost amounting to $18 per unit. Manufacturing operations will occupy all of the building space, so it will be necessary to rent space in a warehouse nearby in order to store finished units of product. The rental cost will be $1,000 per month. In addition, the company will need to rent equipment for use…arrow_forwardTarhata Company received a government grant of 2,000,000 related to a factory building purchased in January 2021 from an industrialist identified by the government. If the entity did not purchase the building, which was located in the slums of the city, it would have been repossessed by the government agency. The entity purchased the building for 12,000,000. The useful life of the building is 5 years with no residual value. On January 1, 2022, the entire amount of the government grant became repayable by reason of non compliance with conditions attached to the grant. Required: Prepare journal entries assuming the government grant is accounted for using: Deferred income approach Deduction from asset approacharrow_forwardThere was an explosion at the plant on December 23, 2021 with damages estimated at $1,385,000. The company has insurance to cover such incidents totaling $5,000,000 if the incident was an accident and $1,000,000 if it was due to company error. The incident was investigated and the explosion found to be due to a faulty gas tank that was last serviced on July 15, 2021. The company policy was to service every 6 months however industry standards was generally 3 months. Management was advised by legal counsel that there was a high probability the company would be held responsible for the damages. Employees were not injured during the incident however the employees’ union has indicated that there are discussions underway relating to filing a $3,000,000 claim for unsafe working conditions. Prepare the journal entries necessary to record the transactions above using appropriate dates. ii.Prepare the adjusting entries necessary at December 31, 2021 in order to properly report interest expense…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning