Business_taxation_Solutions_Chapter7

Business_taxation_Solutions_Chapter7 - Chapter 7 Assignment...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 7 Assignment Week 4 1. a. Because the cost of the survey must be capitalized to the land and is not recoverable until the land is sold, its after-tax cost is $14,200. b. Because the research and experimental expenditure is deductible, its after-tax cost is $33,562 ($44,750 - [$44,750 × 25%]). c. Because the advertising cost is deductible, its after-tax cost is $17,250 ($23,000 - [$23,000 × 25%]). d. Because the grading cost must be capitalized to the land and is not recoverable until the land is sold, its after-tax cost is $120,000. e. Because the grading cost is deductible (preference deduction for farmers), its after-tax cost is $90,000 ($120,000 – [$120,000 × 25%]). 2. a. $6,866 cost basis ($5,950 purchase price + $416 sales tax + $500 incidental cost) b. $169,600 cost basis (FMV of stock exchanged for inventory) c. $7,000 cost basis (FMV of services exchange for machinery) d. $20,000 cost basis 9. a. A land irrigation system is 15-year recovery property. First-year MACRS is $3,125 ($62,500 × 5%). b. Duplicating equipment is 5-year recovery property. First-year MACRS is $12,500 ($62,500 × 20%). c. An ocean-going barge is 10-year recovery property. First-year MACRS is $6,250 ($62,500 × 10%). d. Small manufacturing tools are 3-year recovery property. First-year MACRS is $20,831 ($62,500 × 33.33%). 10. a. Herelt’s MACRS depreciation for 2008 is $54,816 ($383,600 × 14.29%). Its MACRS depreciation for 2009 is $93,944 ($383,600 × 24.49%). b.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/18/2010 for the course ACCT 323 taught by Professor Dorothy during the Spring '09 term at Maryland.

Page1 / 3

Business_taxation_Solutions_Chapter7 - Chapter 7 Assignment...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online