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3 years ago

Which of the following would not be classified as a material particiapant in an activity?

Business

1 answer:

Nadusha1986 [10]3 years ago

6 0

Answer:

C. MACRS depreciation expense.

Explanation:

Material participation in an income-producing activity. That is, an activity that is regular, continuous, and substantial leading to income-producing actions, in which the taxpayer materially participates is an active income or loss.

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Dexter Industries purchased packaging equipment on January 8 for $98,000. The equipment was expected to have a useful life of th

TiliK225 [7]

Answer:

A. Years 1 =$30,667

Year 2 = $30,667

Years 3 =$30,666

B. Year 1 = $41,308

Year 2 = $31,878

Year 3 = $18,814

C. Year 1 = $65,333

Year 2 = $21,778

Year 3 = $7260

2. The double declining method

3. The double declining method

Explanation:

Straight line depreciation =( Cost of equipment - Salvage value) / useful life

($98,000 - $6,000) / 3 = $30,666.67

Depreciation expense each year = $30,666.67

Deprecation expense for

Year 1 =$30,667

Year 2 = $30,667

Year 3 = $92,000 - $30667 = $30,666

Total depreciation = $92,000

Deprecation expense under the unit of activity method = actual operating hours each year × (cost of asset - Salvage value) / estimated total operating hours

For year 1 = 8,980 × ($92,000 / 20,000) = 8980 × 4.6 = $41,308

For year 2 = 6,930 × 4.6 = $31,878

For year 3 = 4090 × 4.6 = $18,814

Total depreciation = $92,000

For double declining method :

Depreciation expense = Net book value × multiplier

Multiplier = 2 × (1 / useful life)

2 × (1/3) = 0.66667

Net book value × multiplier

For year 1 = 0.66667 × $98,000 =$65,333

Net book value = $98,000 - $65,333 = $32,667

For year 2 = 0.66667 × $32,667 = $21,778

Net book value = $32,667 - $21,778 = $10,889

For year 3 = 0.66667 × $10,889= $7260

Total depreciation = $94,371

5 0

4 years ago

On April 1, Lewis Company paid $14,400 for two years of insurance in advance. Lewis Company recorded the transaction by debiting

Dominik [7]

Answer:

31 Dec Expense A/c Dr. $5,400

To Prepaid Expense A/c $5,400

(Therefore, expense for the current financial year recorded)

Explanation:

We know that at the time of insurance paid in advance on 1 April for 2 years, entry was;

Prepaid Insurance A/c Dr. $14,400

To Cash A/c $14,400

Now at year end the expense relating to current period shall be recognized properly in the books, so that matching principle of revenue against expenses shall be matched.

Thus, period from 1 April to 31 December = 9 months

Expense for 9 months = $14,400 \times \frac{9}{24} = 5,400$

That means expense for the year = $5,400

Therefore, entry for such recording will be:

31 Dec Expense A/c Dr. $5,400

To Prepaid Expense A/c $5,400

(Therefore, expense for the current financial year recorded)

6 0

3 years ago

Since bonds are generally considered among the safest investments, you would expect that they would _____. have low interest rat

coldgirl [10]

Since bonds are generally considered among the safest investments, you would expect that they would have lower interest rates. A bond is considered one of the safest types of investments but surprisingly even so, the interest rate to have a decent return on your investment are very good considering the safeness of the investment to begin with. Bonds are common for family and family members to give and pass down to family members to see how the money grows overtime.

5 0

4 years ago

Read 2 more answers

Hudson Co. reports the contribution margin income statement for 2019.

Studentka2010 [4]

Answer:

1. Contribution Margin = $576,000

2. Contribution Margin ratio = 25%

3. Break-even point = 5,400 units

4. Break-even point in sales dollars = $1,296,000

Explanation:

Requirement 1

If Hudson Company raises its selling price to $240 per unit, the contribution margin format income statements will be as follows:

HUDSON CO.

Contribution Margin Income Statement

For Year Ended December 31, 2019

Sales Revenue ($240 × 9,600 units) = $2,304,000

less: variable expense = $(1,728,000)

($180 × 9,600 units)

Contribution Margin = $576,000

It increases due to the rise in sales price.

Requirement 2

We know,

Contribution Margin ratio = (contribution margin ÷ sales revenue) x 100

Given,

From requirement 1, we get, Contribution Margin = $576,000

And total sales revenue = $2,304,000

Putting the value into the above formula, we can get-

Contribution Margin ratio = ($576,000 ÷ $2,304,000) × 100

or, Contribution Margin ratio = 0.25 × 100

Therefore, Contribution Margin ratio = 25%

Requirement 3

We know,

Break-even point (in Units) = Fixed costs ÷ contribution margin per unit.

Given,

Fixed costs = $324,000

contribution margin per unit = sales price per unit - variable cost per unit

contribution margin per unit = $240 - $180

contribution margin per unit = $60

Putting the value into the above formula, we can get-

Break-even point (in Units) = $324,000 ÷ $60

Break-even point (in Units) = 5,400 units

It means, if Hudson company sells 5,400 units, there will be no loss or no profit.

Requirement 4

We know,

Break-even point in sales dollars = Break-even point sales in units × sales price per unit

Given,

From requirement 3, we get the break-even point sales in units = 5,400 units

Sales price per unit = $240

Putting the value into the above formula, we can get-

Break-even point in sales dollars = 5,400 units × $240

Therefore, Break-even point in sales dollars = $1,296,000

It means, if the total sales of Hudson company is $1,296,000, the company will receive no profit. It will not incur any loss too.

8 0

3 years ago

Verizon Wireless has just announced a 2-for-1 stock split, effective immediately. Prior to the split, Verizon Wireless had a mar

stiks02 [169]

Answer:

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4 years ago