ACCT 330 – TEST 2 CHAPTER 6 – DEDUCTIONS AND LOSSES Criteria for deducting business and investment expenses – must be… * Related to a profit-motivated activity of the taxpayer * Ordinary‚ necessary‚ and reasonable in amount * Properly documented * An expense of the taxpayer Expenditure is not deductable if it is… * A capital expenditure * Expense related to tax-exempt income * Illegal or in violation of public policy‚ or * Specifically disallowed by tax law Business
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change in the depreciation methods on assets. The depreciation policy for financial reporting purposes was changed to a straight-line method from a principally accelerated method. There was a change in the use of last-in‚ first-out (LIFO) liquidation in inventory valuation. There was a change in the allowance for doubtful accounts. The company adjusted its allowance for doubtful accounts to 6.7% of sales for 1984 from 10% of sales in 1983. There was change in the R&D expenses. Harnischfeger
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year ended May 31‚ 2014 (in millions): other plant assets $965.8; land $221.6; patents and trademarks (at cost) $515.1; machinery and equipment $2‚094.3; buildings $974; goodwill (at cost) $193.5; accumulated amortization $47.7; and accumulated depreciation $2‚298. Prepare a partial balance sheet for Nike for these items. (List Property‚ Plant and Equipment in order of Land‚ Buildings and Equipment.) NIKE‚ INC. Partial Balance Sheet As of May 31‚ 2014 (in millions) Current AssetsCurrent
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Liabilities Stockholders’ Equity Assets $23‚500 $56‚500 $80‚000 2) RE‚ Beg. Sales Expenses Dividends Net Loss $65‚000 $29‚500 $33‚000 $3‚500 ($3‚500) 3) Salaries Expense‚ Beg. Increase Decrease Increase Increase Salaries Expense‚ Ending $0 $450 $175 $600 $350 $1‚225 4) Purchases Credit Cash Debit Cash Credit Accounts Payable $375 $375 375 375 5) Allied‚ Inc. Insurance Policy $3‚600 Debit Insurance Expense Credit Prepaid Insurance 1‚800 1‚800 6) Supplies‚ Beginning Supplies Purchased Amount
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Year 0 corresponds with 2009‚ year 1 with 2010 etc. We compared the depreciation of the new boat with the depreciation of the overhauled Cynthia II‚ therefore the depreciation is the difference between the depreciation of both options. We calculated depreciation according to the MACRS method‚ including a 10 year economic life time for both boats. We assumed that the training costs are €75000. We did not include the interest expense in the cash flows‚ because we wish to evaluate the earning contributions
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How should those fees be reported in the government-wide statement of activities? a. as a separate item of revenue in the revenue section b. as a direct reduction of the expenses of the health department c. as an element of program revenues‚ which reduce gross expenses of the health department d. as a special item Answer:
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Ratio analysis is a common and useful way to compare accounting numbers to evaluate the performance. Fixed-asset turnover as the profitability analysis to interpret how well a company manages and utilizes its property‚ plant‚ and equipment asset (PP&E). The fixed-asset turnover of Bed Bath & Beyond Inc. is computed by dividing its net sales by its average total fixed assets during 2011 period. The fixed-asset turnover of 7.8355 indicates that Bed Bath& Beyond Inc. could invest in one dollar’s fixed-asset
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subjected to accelerated depreciation‚ increased net income for 1984 by $11.0 million or $.93 per common and common equivalent share. The changes as defined in Note 2 are as follows: a) Harnischfeger computed depreciation expense on plants‚ machinery and equipment using the straight-line method for financial reporting purposes. Prior to 1984‚ the Corporation used principally accelerated methods for its U.S. operating plants. b) The Corporation changed its estimated depreciation lives on certain
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stamps had accumulated. The customer would then visit S&H’s warehouse and redeem merchandise (e.g.. a TV‚ a basketball‚ a set of kitchen towels) for a specified number of filled stamp books. When should S&H recognize the revenue and the expense? How much expense should be recognized? S&H Green Stamps – Suggested Solution Revenue recognition: 1. Revenue recognition normally occurs at the time services are rendered or when goods are sold and delivered. The conditions for revenue recognition are:
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BYP 7-1 FINANCIAL REPORTING PROBLEM — A MINI PRACTICE SET (a) Sales Journal S1 Date Account Debited Invoice No. Ref. Accounts Receivable Dr. Sales Cr. Cost of Sales Dr. Inventory Cr. Purchases Journal P1 Date Account Credited Terms Ref. Inventory Dr. Accounts Payable Cr. Cash Receipts Journal CR1
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