Chapter 7.docx

# Chapter 7.docx - Chapter 7 4 Adjusted tax basis = \$25,000...

• Homework Help
• 3

This preview shows page 1 - 3 out of 3 pages.

Chapter 7 4. Adjusted tax basis = \$25,000 + \$80,000 + \$2,000 + \$7,000 - \$56,000 = \$58,000 5. a. Deferred tax asset = \$52,000 * 35%= \$18,200 b. The temporary difference will reverse in the year that ZeZe disposes of the land. 10. Book Tax Direct material cost \$200,000 \$200,000 Direct labor cost 130,000 130,000 Indirect costs 85,000 116,000 Total cost of 1,000 units \$415,000 \$446,000 Cost of ending inventory (260 units) (107,900) (115,960) Cost of goods sold (740 units) \$307,100 \$330,040 14. a. Herelt’s MACRS depreciation for 2017: \$383,600 * 14.29% = \$54,816 Herelt’s MACRS depreciation for 2018: \$383,600 * 24.49% = \$93,944 b. Adjusted basis = \$383,600 - \$54,816 - \$93,944 = \$234,840 c. Depreciation = 50% * (\$383,600 * 17.49%) = \$33,546 21. 2016: MACRS = 20% * \$73,000 = \$14,400 Depreciation deduction = \$3,160 2017: MACRS = 32% * \$73,000 = \$23,360 Depreciation deduction = \$5,100 2018: MACRS = 19.2% * \$73,000 = \$14,016 Depreciation deduction = \$3,050 25. a. In 2014, Loni’s Section 179 deduction was limited to \$394,100, so its taxable income was zero (\$394,100 taxable income before the deduction -\$394,100 deduction). Loni’s \$105,900 nondeductible expense is carried forward. b. In 2015, the maximum 179 deduction is \$500,000. Loni’s Section

Subscribe to view the full document.

179 deduction is \$129,600, consisting of \$23,700 expense for 2015 + \$105,900 carryforward from 2014, and its taxable income is \$98,400 (\$228,000 taxable income before the deduction - \$25,000 deduction).
• Fall '16
• Ryan

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern