Question

Tara purchased a machine for $40,000 to be used in her business. The cost recovery allowed...

Tara purchased a machine for $40,000 to be used in her business. The cost recovery allowed and allowable for the three years the machine was used are computed as follows. Cost Recovery Allowed Cost Recovery Allowable Year 1 $16,000 $ 8,000 Year 2 9,600 12,800 Year 3 5,760 7,680 If Tara sells the machine after three years for $15,000, how much gain should she recognize? a. $3,480 b. $11,480 c. $6,360 d. $9,240 e. None of these choices are correct.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Cost of machine

40000

Cost recovery allowed

Cost recovery allowable

Year 1

16000

8000

Year 2

9600

12800

Year 3

5760

7680

Residual value

15000

Cost

40000

Less: grater cost of recovery allowed or allowable

Year 1

16000

Year 2

12800

Year 3

7680

36480

Adjusted basis

3520

Recognize gain=

Residual value-adjusted basis

15000-3520

11480

Answer: (B) $11480

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A flood damaged a machine used in Ralph’s business. The machine had been purchased 2 years...
A flood damaged a machine used in Ralph’s business. The machine had been purchased 2 years earlier at a cost of $14,000, and Ralph had claimed $4,000 in depreciation. The FMV of the machine was $18,000 before the flood and $3,000 after the flood. The machine was insured, and Ralph was reimbursed $12,000. What is Ralph’s gain or loss from the casualty? A.$2,000 loss. B.$3,000 loss. C.$2,000 gain. D.$15,000 loss.
You purchased a molding machine at a cost of $88,000. It has an estimated useful life...
You purchased a molding machine at a cost of $88,000. It has an estimated useful life of 12 years with a salvage value of $8,000. What is the 10 year depreciation for this machine computed by the double declining balance method? PLease show formulas used. Will rate. Thanks a) 6,667 b) $4,012. c) $8,488. d) $3018.
1.A sole proprietorship purchased a machine in June of 2019 that cost $700,000. The machine is...
1.A sole proprietorship purchased a machine in June of 2019 that cost $700,000. The machine is a 7 year MACRS asset. Assume the taxpayer wants to maximize current year depreciation and thus wants to utilize 100% bonus depreciation where applicable. What is the total amount of depreciation the taxpayer can take for the machine in 2019? 2.A taxpayer sold a machine that she had owned and used in her business for several years. The gain on the sale was $20,000,...
1.A machine with a salvage value of? $2,000 and a cost of? $40,000 was purchased on...
1.A machine with a salvage value of? $2,000 and a cost of? $40,000 was purchased on January? 1, 2012. What is the depreciation expense for 2012 if the company uses straightminusline depreciation for 10? years? A. ?$3,800 B. ?$40,000 C. ?$4,000 D. ?$38,000 2. A 40?month insurance policy was purchased for? $2,100 on May 1. How much insurance will be expensed on December? 31? A. ?$210 B. ?$2,100 C. ?$53 D. ?$420 3.A machine with a cost of? $20,000, a...
Dave makes a gift of a piano ($12,000 cost; $9,000 accumulated depreciation), used in his business,...
Dave makes a gift of a piano ($12,000 cost; $9,000 accumulated depreciation), used in his business, to a church. Which of the statements below is true with regard to the charitable contribution deduction for this donation? 1. None of the answers provided is correct. 2. If the FMV of the piano is $13,000, the charitable deduction is $1,000. 3. If the FMV of the piano is $7,000, the charitable deduction is $7,000. 4. If the FMV of the piano is...
Property, plant and equipment are: Tangible assets used in the operation of a business having a...
Property, plant and equipment are: Tangible assets used in the operation of a business having a useful life of more than one accounting period. Current assets. Long-term investments. Intangible assets used in the operations of a business having a useful life of more than one accounting period. Tangible assets used in the operation of business having a useful life of less than one accounting period. The relevant factor(s) in calculating depreciation is (are): Cost. Residual value. Useful life. Both cost...
Natalie is thinking of buying a van that will be used only for business. The cost...
Natalie is thinking of buying a van that will be used only for business. The cost of the van is estimated at $36,500. Natalie would spend an additional $2,500 to have the van painted. In addition, she wants the back seat of the van removed so that she will have lots of room to transport her mixer inventory as well as her baking supplies. The cost of taking out the back seat and installing shelving units is estimated at $1,500....
Late in 2018, Felix Machine Company (FMC) management was considering expansion of the company’s international business...
Late in 2018, Felix Machine Company (FMC) management was considering expansion of the company’s international business activities. FMC is a South Carolina–based manufacturer of compound machines for use in industrial equipment. FMC’s worldwide market was supplied from subsidiaries in France, Brazil, and Taiwan, as well as from the United States. The company was particularly successful in Asia, mainly due to the high quality of its products, its technical expertise, and excellent after-sale service. This success led corporate management to consider...
Question 5 A plant site donated by a township to a manufacturer that plans to open...
Question 5 A plant site donated by a township to a manufacturer that plans to open a new factory should be recorded on the manufacturer's books at ___________. Question 5 options: A. the nominal cost of taking title to it i B. Its fair value C. one dollar (since the site cost nothing but should be included in the balance sheet) D. the value assigned to it by the company's directors Question 6 Which of the following costs are capitalized...
Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to...
Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 18 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $111,000. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup. Activity Cost Pool Cost Driver Pool Rates Quantity of Driver for Satin Sheen Incoming material...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT