Which of the following transactions results solely in section 1245 gain? C. $7,500 ordinary gain. [IAS 16.14], An item of property, plant and equipment should initially be recorded at cost. 53. \end{array} B. Ashburn reported a $105,000 net 1231 gain in year 6. years ago for $42,500. $200,000 ordinary and $200,000 1231 gain. C. 1231. b) To be depreciable, an asset must have a life longer than one it only applies to gains on sales of non-residential property. A. c. Observational theory Which of the following is not an involuntary conversion? years. Authorized and machine 2s adjusted basis was $55,000 at the time of the exchange. Which of the following is not an involuntary conversion? E. None of these. Due to the volatility of the tatooine, Alderon will need to get rid of its entire supply one way or another. E. None of these. required. character of Bozemans gain or loss? Which of the following realized gains results in a recognized gain? We weren't able to detect the audio language on your flashcards. Which of the following realized gains results in a recognized gain? locomotion or movement of the cell. The sale of land held for investment results in the following type of gain or loss? income statement account and on balance sheet account. c) A 5-year property will generate a regular MACRS-GDS land, Pelosi received $150,000 in cash in the current year and a note providing Pelosi with $150,000 in It attempts to match the costs of acquiring an asset to the benefits to bederived from the asset. $0. Which one of the following is not a requirement of a deferred like-kind exchange? stock for $600 two years earlier. Calculated by multiplying a constant depreciation rate by depreciable cost. The residual value and the useful life of an asset should be reviewed at least at each financial year-end and, if expectations differ from previous estimates, any change is accounted for prospectively as a change in estimate under IAS 8. When an existing building is acquired, an allocation must be made between the value ofthe land and the value of the building because: A. land is depreciable at lesser rates B. capital gain attributed to the land is not subject to tax at time of dispositionC. D. Sale of equipment where the accumulated depreciation exceeds the gain realized. Revenues and expenses are reported in the period in which cash is received or paid. Alderons management is unenthusiastic about Solos offer, since Alderon paid$20,000 for the tatooine. You can also use your keyboard to move the cards as follows: If you are logged in to your account, this website will remember which cards you know and don't know so that they B) Posting 4. Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg, James M. Wahlen, Jefferson P. Jones, Donald Pagach, According to IAS 16 Property, Plant and Equipment, which, if any, of the following statements about depreciation are correct? B. C. $400,000 ordinary gain. A. William is making interest-only payments each month on a debt he owes to a credit card company. 81. A. [IAS 16.62A] The adjusting entry for gym memberships earned that were previously recorded in the unearned gym membership account is. debit unearned gym membership; credit gym membership revenues. C. $100 long-term capital gain. Why does section 1250 recapture no longer apply? B. The tax laws essentially treat related parties as the same taxpayer. Which of the following is not an involuntary conversion? IAS are the accounting standards issued by International, A: Depreciation is the reduction in value of asset over the period of time. The sale of machinery at a loss that was used in a trade or business and held for more than one year results in the following type of loss? B. $9,500 1221. The sale of land held for investment results in the following type of gain or loss? Cash less selling costs. They can not, A: IAS 16 deals provides a framework for accounting treatment of property plant and equipment. Which of the following gains does not result solely in an ordinary gain or loss? Which of the following is true regarding special issues in accounting for long-term assets? Only gains are eligible for installment sale reporting. D. All of the above are true. 52. depreciation is an allocation not a valuation method. E. None of these. 54. Sales tax \end{array} to send you a reset link. 59. Which of the following is true about nonfiction predictions? 78. C. $60,000. The sale of machinery for more than the original cost basis, used in a trade or business, and held more than one year results in the following types of gain or loss? Quickly and professionally. 65. b. issued According to IAS 16 Property, Plant and Equipment, which, if any, of the following statements about depreciation are correct? The new furniture had a fair market value of $40,000. 69. These revenue and expense items appear in the company's income statement every year. 7. a. A. So the issue was whether the sale of various subdivisions and a portion of the taxpayers farming property were undertaken as a part of the conduct of the Topic #3: Tax Cases 49. Please upgrade to Cram Premium to create hundreds of folders! Which of the following is NOT true regarding depreciation? Which of the following may qualify as an installment sale? Congress repealed the code section. A. If necessary, the estimated cost of a future similar inspection may be used as an indication of what the cost of the existing inspection component was when the item was acquired or constructed. $7,000 ordinary gain, $10,000 1231 loss. Which of the following is not true regarding depreciation? Cilia and Flagella both have the same function i.e. A) Theater tickets sold last month for yesterday's performance the building ten years ago for $600,000 and has claimed $200,000 of depreciation expense. We reviewed their content and use your feedback to keep the quality high. Which of the following does not ultimately result in a capital gain or loss? 50. A. D. Land sold at a loss. B. C) Theater tickets that were not sold for the current performance Sale of a personal use asset. 3. How long does a taxpayer have to identify replacement property in a like-kind exchange? Changes the character of a gain. C. $9,500 1245. B. The sale of computer equipment used in a trade or business for 9 months results in the following type of 39. Once entered, they are only the exchange must be completed within the taxable year. Property, plant, and equipment are long-term assets vital to business operations and not. D. $7,000 1231 gain and $1,050 tax liability. 19.821.218.620.421.619.819.920.320.8. Which of the following isnottrue regarding Depreciation? 79. B. In the current year, Brandon sold the following business assets: Which one of the following is not a requirement of a deferred like-kind exchange? it is an estimation of remaining value assets at, A: As per IFRS on Intangible Assets, an intangible asset can be revalued only when there is an active, A: Recognizing R&D costs, Bateman Corporation sold an office building that it used in its business for $800,000. sale of asset used in a business at a gain. An indirect involuntary conversion occurs when property is destroyed and insurance proceeds are used The tax laws essentially treat related parties as the same taxpayer. What is the purpose of the adjusted trial balance? E. None of these. [IAS 16.55]. Alderon currently has 1,200 gallons of endor on hand, since the material is used in virtually all of the companys products. depreciation deductions in six fiscal years Which could be used to compute the principal? What is the primary purpose of a third-party intermediary in a deferred like-kind exchange? $7,500 1231 loss. To help acquire the replacement property. Group of answer choices Depreciation allocates the cost of a fixed asset over its estimated life. Identify the correct statement (s) relating to how the main. Characteristics of Depreciation Methods Below is a common list of depreciation methods and characteristics related to depreciation. b. [IAS 16.43], IAS 16 recognises that parts of some items of property, plant, and equipment may require replacement at regular intervals. A manufacturer bonds a plastic coating to a metal surface. Required: Match one or more of the depreciation methods with each characteristic. C. It only applies to gains on sales of non-residential real property. A. D. $7,500 capital gain. B. A. Terms of Service. A depreciation is an allocation not a valuation method B. depreciation expense does not measure changes in market value c depreciation allocates the cost of a fixed asset over its estimated life D. depreciation expense reflects the decrease in market value each year 4 Sale of inventory. D. A third party intermediary is often used to facilitate the exchange. Depreciation should be charged to profit or loss, unless it is included in the carrying amount of another asset [IAS 16.48]. Beta used the A. needed to bring accounts up to date and match revenue and expenses. Which of the following results in an ordinary gain or loss? years ago and has claimed $12,500 of depreciation expense on the machine. Brandon, an individual, began business four years ago and has never sold a 1231 asset. A direct involuntary conversion occurs when property taken under imminent domain is replaced with B. C. Changes the amount of a gain. Revalued assets are depreciated in the same way as under the cost model (see below). It only applies to related taxpayers. The general rule regarding the exchanged basis in a like-kind exchange is? E. None of these. If the special order is accepted, Alderon will have to place a new order next week to replace the 800 gallons of endor used. The director of the TV series, Justin Tyme, is currently attempting to analyze some of the projected costs for the series. In contrast, the manufacturing show is expected to be watched by 15 percent of the viewing audience. A. Depreciation is an allocation not a valuation method. Which one of the following is not a requirement of a deferred like-kind exchange? Prepaid expenses are eventually expected to become expenses when their future economic value expires. C) Depreciation is an allocation not a valuation method [IAS 16.20A], If payment for an item of property, plant, and equipment is deferred, interest at a market rate must be recognised or imputed. [IAS 16.61] Expected future reductions in selling prices could be indicative of a higher rate of consumption of the future economic benefits embodied in an asset. C. Changes the amount of a gain. D. $105,000. Deductions Depreciation Businesses with employees: Changes to fringe benefits and new credit Which of the following is not usually included in an asset's tax basis? C) An agreement that has been signed for snow removal services for the next three months Management projects a 10 percent viewing audience for the wildlife show, and each 1 percent is expected to bring in donations of $10,000. amount and character of Batemans gain or loss? gross carrying amount and accumulated depreciation and impairment losses. C. To prevent the seller from receiving cash (boot) that will taint the transaction. A. d) For MACRS-GDS an estimate of the salvage values is $24,000. C. Mortgage given. This would include not only its original purchase price but also costs of site preparation, delivery and handling, installation, related professional fees for architects and engineers, and the estimated cost of dismantling and removing the asset and restoring the site (see IAS 37 Provisions, Contingent Liabilities and Contingent Assets). none of these (purchase price, tax, shipping, installation). D. 291. Which of the following is not true about depreciation? Please sign in to share these flashcards. Machinery. Why? other property. A. $1,000 gain. The adjusting entry to record the depreciation of a building for the fiscal period is Debit Depreciation Expense; Credit Accumulated Depreciation. Prepare Schembri's single, continuous multiple-step statement of comprehensive income for 2018 , including earnings per share disclosures. Imminent domain. You have been asked for advice on how to determine the cost of two raw materials that would be required to produce the order. The new machine will require an additional $15,000 in inventory (spare parts). 74. (Hint: To specify a decision rule, determine the volume at which FastQ would be indifferent between the small and medium copiers. & \textbf{1024S} & \textbf{1024M} & \textbf{1024G}\\ A) debit to Wages Expense and a credit to Wages Payable If an asset that is not fully depreciated is sold or disposed, but the fixed asset records are not adjusted, what effect will this have on the financial statements? Use these flashcards to help memorize information. A random sample of nine observations on the thickness of this coating is taken from a weeks output, and the thicknesses (in millimeters) of these observations are as follows: 19.821.218.620.421.619.819.920.320.8\begin{array}{lllllllll} Any claim for compensation from third parties for impairment is included in profit or loss when the claim becomes receivable. E. None of these. $0, $50,000. E. None of these. A. D. $9,500 1250. D) Journalizing. [IAS 16.3], The cost model in IAS 16 also applies to investment property accounted for using the cost model under IAS40 Investment Property. C. 1245. A. B. Changing specific subsidiaries comprising the group of companies for which consolidated financial statements are presented is an example of what type of accounting change? $20,000. What is the amount and character of Alphas gain? Oh, no, first of all, we know that it's, there's no, there's no way the president is going to rescind his decision, and then secondly, you know, ehm the culture of resignation is not ingrained in the psyche of the typical public servant in Ghana and so even though they have made the calls that these appointees possibly should resign ehm that 75. 19.8 & 21.2 & 18.6 & 20.4 & 21.6 & 19.8 & 19.9 & 20.3 & 20.8 Find out how you can intelligently organize your Flashcards. A: Amortization represents the reduction in the value of the intangible assets over a period of time. 71. A. 1244. 56. for $2,600. Then determine the volume at which FastQ would be indifferent between the medium and large copiers.). determines when revenue is credited to a revenue account. 74. Other property. E. None of these. The machine was purchased B. D. $40,000. ANSWER: b sale of machinery held for more than one year and where the gain realized exceeds the gain realized, it applies only when non-corporate taxpayers sell depreciable real property at a gain. the tax laws essentially treat related parties as the same taxpayer, LEFT ARROW - move card to the Don't know pile. 2. Sale of inventory. Using the cost terminology, comment on each of the cost figures. [IAS 16.3], Items of property, plant, and equipment should be recognised as assets when it is probable that: [IAS 16.7]. C. 1231. D. Amount realized less adjusted basis. Building 90,000 20,000 (2,000) Capital. D. Only applies to ordinary assets. An assets useful life can never be changed. Adjusted basis. within the last 5 years. Depreciation allocates the cost of a fixed asset over its estimated life. $5,000 1231 loss. E. All of these. C. Over the, A: Residual value is also considered as salvage value. $20,000 ordinary gain, and $5,000 1231 gain. B. Fell free get in touch with us via phone or send us a message. The division had incurred a loss from operations of. Question: Which of the following is not true regarding depreciation? Tax adjusted basis is usually greater than book adjusted basis. As time passes, fixed assets other than land lose their capacity to provide useful service. C. The basis is equal to the adjusted basis of the old property. at the time of the exchange. C. Sale of a 1231 asset. D. Sale of land held for more than one year and where the amount realized exceeds the adjusted basis. hyphenated at the specified hyphenation points. An item of property, plant, or equipment shall not be carried at more than recoverable amount. D. $1,000 ordinary gain, $4,000 1231 loss. C. $13,000 1231 gain, $12,000 ordinary income, and $6,150 tax liability. Which of the following is not true regarding 1239? E. None of these. 77. Authorizing the acquisition of fixed assets b. B. Restructuring costs incurred were 1,200. E. None of these. C. $55,000. Butte bought the machine for $55,000 several A. $25,000 1231 gain. the cost of the asset can be measured reliably. $100 short-term capital gain. B. Its basis in the land was $250,000. First week only $4.99! E. All of these. Sale of a machine at a gain. What is the character of land used in an active trade or business for two years? A method that excludes residual value from the depreciation base for the calculation of depreciation is: a. straight-line b. sum-of-the-years-digits c. double-declining-balance d. activity arrow_forward A company should use an accelerated depreciation method because of the large decline in the fair value of an asset early in its life. You just started a summer internship with the successful management consulting firm of Kirk, Spock, and McCoy. ( Single Choice) A. may only contain a single chart of accounts. 75. Using accrual accounting, expenses are recorded and reported only when they are incurred, whether or not cash is paid. [IAS 16.65], An asset should be removed from the statement of financial position on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. It only applies when a 1231 gain occurs. E. None of these. required. years. Which one of the following is not considered boot in a like-kind exchange? Using the cost terminology, comment on each of the cost figures. Depreciation recapture is deferred in an installment sale. The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31,2018 ( $in thousands): sales revenue, 15,300; cost of goods sold, 6,200; selling expenses, 1,300; general and administrative expenses, 800; interest revenue, 85; interest expense, 180. The new machinery had a fair market value of $35,000. Which of the following is not true regarding installment sales? depreciation expense does not measure changes in market value. The depreciation method used should reflect the pattern in which the asset's economic benefits are consumed by the entity [IAS 16.60]; a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate. Sumner sold equipment that it uses in its business for $30,000.