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vlada-n [284]
3 years ago
11

On January 15, 2019, Dillon purchased the rights to a mineral interest for $3,500,000. At that time, it was estimated that the r

ecoverable units would be 500,000. During the year, 40,000 units were mined and 25,000 units were sold for $800,000. Dillon incurred expenses during 2019 of $500,000. The percentage depletion rate is 22%. Dillon's depletion deduction for 2019 would be:
Business
1 answer:
lutik1710 [3]3 years ago
7 0

Answer:

$175,000

Explanation:

Depletion per Unit =$3500000 / 500000 = $7 per unit

25,000 units were sold during the year.

There are two ways of figuring depletion on mineral property.

1. Cost Depletion

2. Percentage Depletion

Generally, we must use the method that gives you the larger deduction.

Calculation of Cost Depletion:

Cost Depletion = Units Sold * Depletion Rate = 25,000 units * $7 per unit = 175,000

Calculation of Percentage Depletion:

Percentage Depletion = Gross Income from Property During the Year * Depletion Rate = 800,000 * 22% = 176,000

Percentage Depletion cannot be more than 50% of net taxable income from the property.

Percentage Limit = (Sales - Expenses ) * 50% = (800,000 - 500,000) * 50% = 300000*50% = 150,000

Thus Percentage Depletion is limited to $150,000

Thus, the deduction is $175,000 (Higher to Cost or Percentage Depletion)

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Answer:

The  amount of cash received by the magazine company as advance payments from customers during the year 2013 must have been $14,400.

Explanation:

Let cash received from customers be x :

$12,700 + x - $14,800 = $12,300

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8 0
3 years ago
Alice worked for Fountain Valley, Inc., a corporation that manufactured baby supplies. According to her employment contract with
earnstyle [38]

Question Completion with Answer Options:

A. Yes, according to the terms of her contract.

B. Yes, according to the duty of good faith and fair dealing.

C. No, according to the at-will termination provision in her contract.

D. No, because subsequent conduct of the parties modified the contract.

Answer:

Fountain Valley, Inc. and Alice

B. Yes, according to the duty of good faith and fair dealing.

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Alice is entitled to the bonus of $10,000 because the duty of good faith and fair dealing requires Fountain Valley not to deny Alice the benefits arising from their valid contract.  Since Alice's employment contract included a 5% bonus of all sales in excess of the previous 12 months' sales, the Fountain Valley, Inc. should not deny Alice's claim to the benefits.

b) Employment contract terms = $78,000/year plus 5% bonus of all sale in excess of the previous 12 months' sales.  The value of sales in 2017 is $200,000 more than in 2016.  5% of $200,000 = $10,000.  Therefore, Alice is entitled to the bonus.

8 0
2 years ago
Suppose the spot exchange rate for the Canadian dollar is Can$1.12 and the six-month forward rate is Can$1.14.
andreyandreev [35.5K]

Answer:

Explanation:

Given that:

a)

1$ = Can $1.12

It takes a value of 1 U.S dollar to have 1.12 Canadian dollars.  This signifies that the U.S dollar is worth more than Canadian dollars.

b)

Assuming that the absolute Purchasing Power Parity PPP holds,

Since 1$ = Can $1.12, the cost  in the United States of an Elkhead beer, if the price in Canada is Can$2.85 can be determined to be:

= \dfrac{2.85}{1.12}

= $2.545

c)

Yes, the U.S. dollar is selling at a premium relative to the Canadian dollar.

This is because we are being told that the spot exchange rate for the Canadian dollar is Can $1.12 & in six (6) months time the forward rate will be Can $1.14.

d)

The U.S dollar is expected to appreciate in value because it is trading at a premium in the forward market.

e)

Canada has higher interest rates. This determined by using the formula:

= \dfrac{(\dfrac{Fwd}{Spot }-1)}{n}

where; n= numbers of years = 6 month/12 month = 0.5 year

Then;

=\dfrac{(\dfrac{1.14}{1.12 }-1)}{0.5}

= \dfrac{(1.0178-1)}{0.5}

= \dfrac{(0.0178)}{0.5}

= 0.0356

= 3.56%

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Answer:

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An organization that has a broad span of control, is highly responsive to customer demands, and relies on lower level employees
Andrew [12]
I believe this is answer D
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