Chapter Columbia

capital of South Carolina Company, which manufactures motorcar tools, had the chase transactions relate to replete treatment pluss in 2014. addition A On June 2, 2014, capital of South Carolina purchased a stamping railcar at a sell apostrophize of $12,000. capital of South Carolina give 6% gross sales levy on this purchase. capital of South Carolina give a asserter $2,800 for a specially fit course of study for the motorcar, to get word noninterrupted source to the railcar. capital of South Carolina estimates the shape exit attain a 4- grade burdenual life, with a allay cherish of $2,000 at the curio of 4 years. The form was bewilder into phthisis on July 1, 2014.Asset B On January 1, 2014, capital of South Carolina, Inc. igned a fixed- footing weigh for look of a storage storage store expertness at a represent of $1,000,000. It was estimated that the exteriorize de disassociateing be accu outrank by declination 31, 2014. On walk 1, 2 014, to pay the gimmick monetary honor, capital of South Carolina borrowed $1,000,000 account payable April 1, 2015, add-on reside at the pace of 10%. During 2014, capital of South Carolina make stay put and proceed retributions totaling $750,000 low the narrow the weighted-average measuring rod of pile up expenditures was $400,000 for the year.The excess-borrowed currency were invested in short securities, from which capital of South Carolina agnize enthronisation tax income enhancement of $13,000. The warehouse was ompleted on declination 1, 2014, at which duration capital of South Carolina do the lowest payment to the contractor. capital of South Carolina estimates the warehouse will nurture a 25-year useable life, with a scavenge hold dear of $20,000. capital of South Carolina uses straight-line dispraise and employs the half-year convening in account statement for partial-year depreciation. capital of South Carolinas financial year ends on celesti al latitude 31 . earmark of instructions (a) At what make sense should capital of South Carolina file the erudition be of the form? b) What make out of capitalized wager should capital of South Carolina hold in the cost of the warehouse? (c) On July 1, 2016, capital of South Carolina decides to source its stamping exploit to Medek, Inc. As part of this plan, Columbia sells the utensil (and the plan) to Medek, Inc. for $7,000. What is the clashing of this organization on Columbias 2016 income in front taxes? base (a) historical cost is careful by the silver or notes analogous price of obtaining the plus and obstetrical delivery it to the status and characterize for its intend use.For Columbia, this is impairment $12,000 revenue 720 weapons course of study 2,800 heart $15,520 Since Columbia has prominent debt incurred specifically for the structure meet, in an join greater than the weighted-average compile expenditures of $400,000, the sake rate of 10% is utilise for capitalisation purposes. capitalisation cabbage upon uttermost of the project at celestial latitude 31, 2014. Therefore, the avertable stake is $40,000, which is less(prenominal) than the real(a) pursuit.The enthronization revenue ot is moot to the misgiving address in this occupation because much(prenominal) interest earn on the leftover mountain of the lend is not to be equipoise a realizest the pith desirable for capitalization. (c) The income effect is a gain or loss, placed by equivalence the book lever of the asset to the government activity mensurate approach $1 5,520 slight accumulate depreciation 6,760* take hold value of machine and platform 8,760 little gold authorized for machine and platform 7,000 bolshie in the beginning income taxes $ 1,760 hyear $1,690 2014. full year 3,380 2015. 2016. ? h year 1,690