Explore BrainMass

# Calculation of Depreciation and the use of Journal Entries

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

See attachment.

9. Listed below is information for the Higher Corporation:

2006 2007
Pretax Accounting Income \$160,000 \$220,000
Pretax Taxable Income 180,000 200,000

Assume that Higher's tax liability is based on a flat 40% rate.

Required:

a. Prepare the journal entry to record Higher's income tax expense for 2006.
b. Prepare the journal entry to record Higher's income tax expense for 2007.

10. McNally Company recently acquired a building from Perry Company in exchange for 5,000 shares of its capital stock and \$15,000. Information relating to the sale is detailed below:

Perry's net book value of building \$62,000
Professional appraisal value of building 64,000
Market value of McNally Company Stock \$9.00/share

Required:

Record the purchase of the building on the books of the McNally Company.

11. Yin Company recently purchased land and a building for \$210,000. The building was appraised at \$120,000 and the land was appraised at \$60,000.

Required:

Show Yin's balance sheet presentation of the land and building.

12. A machine costing \$48,000 had an estimated useful life of 5 years and a salvage value of \$3,000 when purchased on January 3, Year 1.

Required: Supply the missing information in the table below:

Depreciation Accumulated Book
Expense for Depreciation Value
Method Year 2 on 12/31/Yr 2 on 12/31/Yr 2

Straight-Line ____________ ____________ ____________

Double Declining
Balance ____________ ____________ ____________

© BrainMass Inc. brainmass.com June 3, 2020, 9:40 pm ad1c9bdddf

#### Solution Preview

Please find attached a formatted MS Excel spreadsheet containing the text below as well as helpful notes, which will help in gaining an understanding of the subject matter.

9 Listed below is information for the Higher Corporation:

2006 2007
Pretax Accounting Income \$160,000 \$220,000
Pretax Taxable Income 180,000 200,000

Assume that Higher's tax liability is based on a flat 40% rate.

Required:
a. Prepare the journal entry to record Higher's income tax expense for 2006.

Income tax expense 72,000
Income taxes payable 72,000
(To record income tax expenses for 2006)

b. ...

#### Solution Summary

This posting contains a formatted MS Excel file which illustrates how to perform journal entries for various transactions, including: depreciation, tax expense, and fixed asset purchase.

\$2.19