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anyanavicka [17]
3 years ago
8

A taxpayer incorrectly took a $5,000 deduction (e.g., incorrectly calculated depreciation) in 2019 and as a result, his taxable

income was reduced by $5,000. The taxpayer discovered his error in 2020. The taxpayer must add $5,000 to his 2020 gross income in accordance with the tax benefit rule to correct for the 2019 error.a. trueb. false
Business
1 answer:
julia-pushkina [17]3 years ago
6 0

Answer:

b. False

Explanation:

The tax payer has incorrectly deducted depreciation expense from his income which resulted in a lower tax being paid. Deductions reduce the tax and lesser income is taxed if deductions are incorrectly classified. The income taxed in this case will be from a lower tax bracket due to wrong deduction of depreciation expense of $5,000 and taxable income was reduced by $5,000 in 2019.

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Bundle A is strictly preferred to bundle B, and bundle B is strictly preferred to bundle C. If the utility associated with B is
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3 years ago
Horton Stores exchanged land and cash of $5,000 for similar land. The book value and the fair value of the land were $90,000 and
Anuta_ua [19.1K]

Answer:

c. $ 95,000 $ 0

Explanation:

<u>Calculation of cost of land acquired</u>

For the purpose of recording of land acquired in the books of accounts, the accounting values of consideration paid shall be considered as per the generally accepted accounting principles as well as as per International accounting standard (IAS) - 16 'Property, plant and equipment'. Hence the land shall be recorded as per the following amounts:

Consideration paid in cash (A) = $ 5,000

Consideration in kind (land) (B) = $ 90,000 (Refer Note 1)

Total cost of new land (A+B) = $ 95,000

<em>Note 1</em>

Fair value is irrelevant for the purpose of capitalization of asset (IAS-16)

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