Company Y began business in February 2015. By the end of the calendar year, it had billed its clients for $3.5 million of services and had incurred $800,000 of operating expenses. As of December 31, it had collected $2.9 million of its billings and had paid $670,000 of its expenses. It expects to collect the remaining outstanding bills and pay the remaining expenses by March 2016. Company Y adopted a calendar year for federal tax purposes. It may use either the cash method or the accrual method of accounting on its first tax return, and has asked you to quantify the value of using the cash method for the first year. In doing so, assume Company Y uses a 5 percent discount rate to compute NPV.
Answer to relevant QuestionsCorporation VB’s tax returns for 2012, 2013, and 2014 provide the following information: a. On the basis of the above data, did VB derive any tax benefit from its 2012 NOL? Explain your conclusions. b. VB generated a ...On February 1, Mr. B purchased a business from Mr. and Mrs. S for a lump-sum price of $750,000. The business included the following balance sheet assets: Appraised FMV Accounts receivable ……………………… $ ...Assuming a 25 percent tax rate, compute the after-tax cost of the following business expenditures: a. $14,200 cost of a survey capitalized to land. b. $44,750 research and experimental expenditure. c. $23,000 advertising ...Margo, a calendar year taxpayer, paid $80,000 for machinery (seven-year recovery property) placed in service on August 1, 2015. a. Assuming that the machinery was the only tangible property placed in service during the year, ...Mr. Z, a calendar year taxpayer, opened a new car wash. Prior to the car wash’s grand opening on October 8, Mr. Z incurred various start-up expenditures (rent, utilities, employee salaries, supplies, etc.). In each of the ...
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