Answer:
If Tom is single, he can claim THE $250,000 CAPITAL GAINS EXEMPTION.
Explanation:
Capital gain taxes are taxes on any profit you make from the sale of something, such as a house. These taxes apply unless you upgraded to a home with a more expensive purchase price.
With the passage of the taxpayer relief act, individuals can exclude up to $250,000 of capital gains from taxation and married couples can exclude up to $500,000.
To qualify for the home sale capital gains tax exemption, one must pass the use test (looking at whether one used/lived in one's home). One must have owned and lived in the residence for at least two out of the last five years before the sale.
Therefore, since Tom is single and has lived in his home for the past four years and wants to sell, he qualifies for the exemption and can claim THE $250,000 CAPITAL GAINS EXEMPTION.
Answer:
b.how costs react to changes in activity level
Explanation:
Cost behavior analysis is the study of how operating cost varies with changes in production level. Management uses mathematical functions to understand how costs change relate to activity level. The costs in reference include fixed, variable, and mixed costs incurred in the manufacturing process.
Understanding cost behavior helps management in controlling and planning business costs. The analysis is useful in determining the cost, profit, volume relationship, including break-even points.
Answer:
D. $ 367.500
Explanation:
We have to first compute the total direct labor cost. This is done by multiplying the estimated direct labor hours with the hourly rate.
Total Direct Labour costs $ 17.50 per hour * 15,000 hours = $ 262,500
Estimated manufacturing overhead per the data in the question is 140 % of Direct labor cost,
Estimated manufacturing overhead is $ 262,500 * 140 % = $ 367,500
Answer:
S/N ACCOUNT DEBIT CREDIT
1 Equipment $22,000
Cash $22,000
Being payment for new component expected to increase the
equipment’s productivity by 10% a year
2. Equipment Repairs expenses $6,250
Cash $6,250
Being payment for equipment repair
3. Equipment $14,870
Cash $14,870
Being payment for equipment repair to prolong the useful life
the asset
Explanation:
The initial cost incurred in acquiring an asset is debited to asset account, subsequently every other cost spent on the assets are either expenses against the earning of that period or expensed over many years over the useful life of the asset.
Capitalization is the recognition of an expense as an asset in the balance sheet rather than expenses in the income statement.
The payment of $22,000 paid for the equipment productivity must be capitalized, that is added to the cost of the asset because it is a cost that is expected to increase the equipment’s productivity by 10% a year.
The $6,250 paid for normal repair is a revenue items which is to be expensed against the earning of that period.
The $14,870 paid for repairs which will increase the useful life of the equipment from four to five years is a capital expenditure which should capitalized, that is added to the cost of the asset.
