Why would a taxpayer elect to capitalize and amortize intangible drilling costs (IDCs) rather than expense such costs?
What will be an ideal response?
An election to expense IDCs reduces pre-depletion taxable income and thus results in a smaller percentage depletion deduction. Capitalization and amortization of such costs would generally result in a higher pre-depletion taxable income, which would result in a higher percentage depletion deduction if it was anticipated that this limitation would apply. Otherwise, it would be more beneficial to expense the IDCs since the higher of percentage or cost depletion is utilized.
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On November 1 . 2014, Balloon Company sold some limited edition art prints to Sitake Company for ¥47,850,000 to be paid on January 1 . 2015 . The current exchange rate on November 1 . 2014, was ¥110=$1, so the total payment at the current exchange rate would be equal to $435,000 . Balloon entered into a forward contract with a large bank to guarantee the number of dollars to be received
According to the terms of the contract, if ¥47,850,000 is worth less than $435,000, the bank will pay Balloon the difference in cash. Likewise, if ¥47,850,000 is worth more than $435,000, Balloon must pay the bank the difference in cash. Assuming the exchange rate on December 31 . 2014 is ¥115=$1, what amount will Balloon disclose as the fair value of the forward contract on December 31 . 2014 (answers rounded to the nearest dollar)? a. $0 b. $18,913 c. $20,714 d. $416,087
Use this information for questions that refer to the Yummy Ice Cream case. Kelly Stich, marketing manager for Yummy Ice Cream Products, is thinking about some of her products and her promotion plans for the coming year. Yummy Ice Cream Products is introducing a new ice cream treat called Planet Savers. This treat uses ice cream produced with environmentally friendly processes that save energy and protect the ozone. Yummy plans to send articles to magazines, local newspapers, and environmental groups that explain the environmentally safer treat. The product also has a unique texture and different flavor.Stich wants to use counter cards and in-store signs to let people know about Cherry Walrus, the company's new flavor. She is also developing sales training materials that will teach ice
cream scoopers in Yummy's ice cream stores to promote the product. Right after Cherry Walrus is introduced, each store will also hand out coupons that are good for one day only.Yummy Mondaes is a product that has been around for 25 years. It is Yummy's take on the classic ice cream sundae, but white-brownie and coffee-flavored crumbles are added to make it extra special. The company sells this product in one-quart and two-quart containers through major grocery store chains. It relies on personal selling and price discounts to retailers to move more of the product. The company does very little consumer promotion for this product.Yummy Fudge-on-a-Stick is a new product of fudge-flavored ice cream on a stick. Yummy plans to sell it through retail grocery stores and is launching an aggressive advertising program that will use television, radio, newspaper, magazines, and the Internet. Most of its promotion will be directed at consumers.Two years ago, the company introduced Yummy Fruit-on-a-Stick, an all-natural frozen fruit product on a stick. The product category has been popular, continues to grow, and is in the market growth stage of the product life cycle. Based on where the product category is in the product life cycle, promotion for Yummy Fruit-on-a-Stick should A. use reminder advertising. B. emphasize ways that Yummy Fruit-on-a-Stick is best. C. build primary demand. D. be cut back or dropped so that money can be used on products that contribute to customer equity.
In a merger, the shareholders of the merged corporation always receive stock of the surviving
corporation. Indicate whether the statement is true or false
From a portion of a probability distribution, you read that P(demand = 1 ) is 0.05, P(demand = 2 ) is 0.15, and P(demand = 3 ) is .20. The cumulative probability for demand = 3 would be which of the following?
A) 0.133 B) 0.200 C) 0.400 D) 0.600 E) Cannot be determined from the information given.