Everest Corp

question 34

Essay

Everest Corp.acquires a machine (seven-year property)on January 10,2013 at a cost of $2,015,000.Everest makes the election to expense the maximum amount under Sec.179,but elects out of bonus depreciation.
a.Assume that the taxable income from trade or business is $1,000,000.
b.Assume instead that the taxable income from trade or business is $400,000.

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Definitions:

Gross Sales

The total sales revenue of a business before any deductions are made for returns, allowances, or discounts.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that may not be collectible.

Aging of Accounts Receivable

A report or method that categorizes a company's accounts receivable according to the length of time an invoice has been outstanding to evaluate the likelihood of collecting on those invoices.

Receivables Balance

The total amount owed to a business by its customers or clients for goods or services delivered on credit.