[jeff]

I’ve had a few requests for April/May Study Groups…March will be here before you know it.

In order to take an early April exam, you should begin studying…now. 🙂

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

$60K–The municipalities is a permanent difference so no deferred taxes. The difference of 200,000 in depreciation * 30% tax rate=$60,000 deferred tax

[Anonymous]

Dislike the Garden State Parkway immensely! My stepdaughter used to live in Patterson. Disliked that drive several times a year from NC.

[missbehaved8907]

@Spartan & @Teetee – really delayed response, but thanks for your help last night. YES. I was absolutely mistaking it for ‘non-monetary' when it clearly stated it was a monetary transaction…..

As i've learned from reading these posts… RTMFQ 🙁

REG (08/2011 - 73)
AUD (01/2013 - 63) (04/2013 - 72)
FAR (11/2013 - 61) (02/2014)- 71)
BEC - No attempt

[NJPRU]

Mamma – are you in NC now? I have family right outside of Charlotte!

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[jrosen92770]

I included the permanent difference, so I guess there is no deferred tax liability. How are permanent diff's treated?

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[Anonymous]

@NJPRU–Not anymore. We live in Florida now. Born and raised in NC though–Raleigh/Durham area.

[Anonymous]

Permanent Differences have no tax impact so they will never be considered in the computations for deferred tax assets/liabilities. The only time they would be relevant is if you were given pretax accounting income and a list of differences and asked to compute the taxable income. You would add or subtract the permanent differences completely to get to the taxable income. The temporary differences you would use to compute deferred taxe effects AND add or subtract them to get to the taxable income.

[jrosen92770]

Thanks CPAMommy.

BEC - 5/26/2013 75
REG - 8/31/2013 82
AUD - 11/24/2013 74, 2/9/2014 92
FAR - 5/25/2014 85

NY CPA

[NJPRU]

Ward Company incurred research and development costs in Year 1 as follows:

Equipment acquired for use in various

research and development projects

$975,000

Depreciation on the above equipment

135,000

Materials used

200,000

Compensation costs of personnel

500,000

Outside consulting fees

150,000

Indirect costs appropriately allocated

250,000

Answers:

A: 1,235,000

B: 850,000

C: 1,825,000

D: 1,085,000

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[Anonymous]

Just an FYI–Found another permanent difference that I was unaware of. Depletion Expense–“But using percentage depletion for tax, which means taking depletion in excess of cost, creates a permanent difference which does not affect the deferred income tax provision. “

[Anonymous]

@NJPRU–Is it A?

[NJPRU]

It sure is Mamma Dukes!

Materials used in R&D ($200,000), compensation costs of personnel ($500,000), outside consulting fees ($150,000), and indirect costs appropriately allocated ($250,000) are R&D costs that should be expensed immediately. The cost of equipment having an alternative future use should be capitalized and depreciated. Alternative use includes other R&D projects as well as non-R&D use. The depreciation, in this case $135,000, is included in R&D cost.

Total R&D expense was thus $1,235,000 ($200,000 + $500,000 + $150,000 + $250,000 + $135,000).

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[stoleway]

Answer is D

Depreciation on the equipment (Because equipment has alternative uses)

135,000

Materials used

200,000

Compensation costs of personnel

500,000

Indirect costs appropriately allocated

250,000

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[stoleway]

@NJPRU

I have a question on the outside consulting fees, is it the firm (WARD) that is doing a consulting work for outside firms, or some outside firm is doing the consulting for the WARD?

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[NJPRU]

@stoleaway

I read this to mean that the consulting fees were G/A expenses relating to the R&D process – if they weren't related, they would have been excluded from the costs – looks to me like an outside firm was doing the consulting.

AUD: DONE
FAR: DONE
BEC: DONE
REG: DONE

IM GOING TO BE A CPA!!!!!

[Author]

Replies