Comp SM_Ch16 - CHAPTER 16 ACCOUNTING PERIODS AND METHODS...

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CHAPTER 16 ACCOUNTING PERIODS AND METHODS SOLUTIONS TO PROBLEM MATERIALS Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 1 Tax year: natural business year New 2 Tax year: S corporation Unchanged 2 3 Tax year: personal service corporation Unchanged 3 4 Restoration under claim of right doctrine Unchanged 4 5 Cash method Unchanged 5 6 Accrual basis: who must use Unchanged 6 7 Cash method: grocery store Unchanged 7 8 Cash versus accrual method Unchanged 8 9 Issue ID Unchanged 9 10 Accounting method: timing of deduction Unchanged 10 11 Use of reserves New 12 Installment method: benefits Modified 12 13 Recognized gain: effects of mortgage assumed New 14 Installment method: related parties Unchanged 13 15 Installment method: electing out Unchanged 14 16 Long-term contracts Unchanged 15 17 Long-term contracts: length Unchanged 16 * 18 Partnership tax year Unchanged 17 19 Fiscal year: personal service corporation Unchanged 18 * 20 Change in tax year: short-period tax Modified 19 21 Cash versus accrual method: tort and breach of contract Unchanged 20 22 Cash and accrual basis expenses and income Modified 21 23 Accrual method: required use New 24 Accrual basis: all-events test and economic performance test Unchanged 23 16-1
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16-2 2005 Comprehensive Volume/Solutions Manual Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 25 Change in accounting method: § 481 adjustment Unchanged 24 * 26 Installment method: benefits Unchanged 25 * 27 Installment method: calculations Modified 26 * 28 Installment sales: imputed interest Unchanged 27 * 29 Installment sales between related parties Modified 28 * 30 Disposition of installment obligations Unchanged 29 31 Long-term contracts: completed contract method Unchanged 30 32 Long-term contracts: capitalization versus expense and percentage of completion method Unchanged 31 33 Long-term contract methods Unchanged 32 34 Long-term contract methods Unchanged 33 * 35 Percentage of completion method: lookback Unchanged 34 Research Problem 1 Time of accrual New 2 Change in accounting method Unchanged 3 Internet activity New *The solution to this problem is available on a transparency master.
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Accounting Periods and Methods 16-3 CHECK FIGURES 18.a. FYE March 31. 18.b. FYE June 30. 19.a. $45,000. 19.b. Deduction limit $120,000. 20. $6,283. 22.a. Deduction $120,000 under both methods. 22.b. Accrual income $12,000; cash basis income $10,000. 22.c. Accrual deduction $0 for 2004; cash basis deduction $30,000 for 2004. 22.d. Accrual and cash basis deduction $146,573. 23. Only d. must use accrual method. 24. Total 2004 expense $2.2 million. 25. § 481 negative adjustment of $190,000 is required. 26. Option 1 $79,281; option 2 $81,766. 27.a.
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This note was uploaded on 03/14/2010 for the course ACC 11101 taught by Professor Sun during the Spring '10 term at Abraham Baldwin Agricultural College.

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Comp SM_Ch16 - CHAPTER 16 ACCOUNTING PERIODS AND METHODS...

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