Homework Answers
Correct Answer -7 : b. $300,000
Taxable Income = $1000000X 30%= $300000
Correct Answer -8 : d. $1200,000
Deferred Tax Asset = $4000000X 30%= $1200000
Correct Answer -9 : c. $800,000
Deferred Tax Asset = $6000000X 30%= $1800000
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cevable or prepaid income taxes balances Problem Solving (5 points each) Hopkins Co. at the end...
Hopkins Co. at the end of 2017, its first year of operations, prepared a reconciliation between...
Hopkins Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $3,000,000 Estimated litigation expense 4,000,000 Extra depreciation for taxes (6,000,000) Taxable income $3,000,000 $1,000,000 The estimated litigation expense of $4,000,000 will be deductible in 2018 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2,000,000 in each of the next three years. The income...
Hopkins Co. at the end of 2020, its first year of operations, prepared a reconciliation between...
Hopkins Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $3,000,000 Estimated litigation expense 4,000,000 Extra depreciation for taxes (6,000,000) Taxable income $1,000,000 1). The estimated litigation expense of $4,000,000 will be deductible in 2021 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2,000,000 in each of the next three years. The income tax...
At the end of 2020, its first year of operations, Wesley Co. prepared a reconciliation between...
At the end of 2020, its first year of operations, Wesley Co. prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $ 520,000 Extra depreciation taken for tax purposes (1,200,000) Estimated expenses deductible for taxes when paid 890,000 Taxable income $ 210,000 Use of the depreciable assets will result in taxable amounts of $400,000 in each of the next three years. The estimated litigation expenses of $890,000 will be deductible in 2023 when settlement...
PART I. Multiple-choice Problems (30 points, 3 points each) Use the following information for questions /...
PART I. Multiple-choice Problems (30 points, 3 points each) Use the following information for questions / and 2. Lansing Co. at the end of 2020, its first year of operations, prepared reconciliation between prelax financial income and taxable income as follows: Pretax financial income $ 1.200.000 Estimated litigation expense 1.000.000 Extra depreciation for taxes 700,000 The estimated litigation expense of $1,000,000 will be deductible in 2021 when it is expected to be paid. Use of the depreciable assets will result...
Oriole Co. at the end of 2020, its first year of operations, prepared a reconciliation between...
Oriole Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $2505000 Estimated litigation expense 3505000 Extra depreciation for taxes (5514000) Taxable income $ 496000 The estimated litigation expense of $3505000 will be deductible in 2021 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $1838000 in each of the next 3 years. The income tax...
The following differences enter into the reconciliation of financial income and taxable income of Abbott Company...
The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2017, its first year of operations. The enacted income tax rate is 30% for all years. Pretax accounting income $800,000 Excess tax depreciation (480,000) Litigation accrual 70,000 Unearned rent revenue deferred on the books but appropriately recognized in taxable income 60,000 Interest income from New York municipal bonds (20,000) Taxable income $430,000 1. Excess tax depreciation will reverse equally over a four-year period, 2018-2021. 2. It...
Use the following information to answer Questions 7 through 9 Thimphu Company prepared the follow...
Use the following information to answer Questions 7 through 9 Thimphu Company prepared the following reconciliation between pretax financial accounting income and taxable income for the year ending December 31, 20X0, its first year of operations. Pretax Financial Accounting Income Estimated Litigation Expense Installment Sales Gross Profit Taxable Income 200,000 500,000 400,000) 300,000 The estimated litigation expense of $500,000 will be deductible in 20X2 when it is expected to be paid. The gross profit from the installment sales Will be...
Problem - 3 (Five Differences, Compute Taxable income and Deferred Taxes, Draft Income Statement) Wise Company...
Problem - 3 (Five Differences, Compute Taxable income and Deferred Taxes, Draft Income Statement) Wise Company began operations at the beginning of 2015. The following information pertains to this company. 1. Pretax financial income for 2015 is $100,000. 2. The tax rate enacted for 2015 and future years is 40%. 3. Differences between the 2015 income statement and tax return are listed below: (a) Warranty expense accrued for financial reporting purposes amounts to $7,000. Warranty deduc- tions per the tax...
(c) Problem 2. The following differences between financial and taxable income were reported by Dider Corporation...
(c) Problem 2. The following differences between financial and taxable income were reported by Dider Corporation for the year: (a) Excess of tax depreciation over book depreciation $10,000 (b) Interest revenue on municipal bonds 9,000 Excess of estimated warranty expense over actual expenditures 54,000 (d) Rent of next year paid 12.000 Fines paid 30,000 (t) Excess of income reported under percentage-of-completion accounting for financial reporting over completed-contract accounting used for tax reporting. 45,000 Interest on indebtedness incurred to purchase tax-exempt...
Brief Exercise 107 Pole Co. at the end of 2018, its first year of operations, prepared...
Brief Exercise 107 Pole Co. at the end of 2018, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $480,000 Extra depreciation taken for tax purposes (1,056,000) Estimated expenses deductible for taxes when paid 950,000 Taxable income $374,000 Use of the depreciable assets will result in taxable amounts of $352,000 in each of the next three years. The estimated litigation expenses of $950,000 will be deductible in 2021 when...
Hopkins Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $3,000,000 Estimated litigation expense 4,000,000 Extra depreciation for taxes (6,000,000) Taxable income $3,000,000 $1,000,000 The estimated litigation expense of $4,000,000 will be deductible in 2018 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2,000,000 in each of the next three years. The income...
PART I. Multiple-choice Problems (30 points, 3 points each) Use the following information for questions / and 2. Lansing Co. at the end of 2020, its first year of operations, prepared reconciliation between prelax financial income and taxable income as follows: Pretax financial income $ 1.200.000 Estimated litigation expense 1.000.000 Extra depreciation for taxes 700,000 The estimated litigation expense of $1,000,000 will be deductible in 2021 when it is expected to be paid. Use of the depreciable assets will result...
Use the following information to answer Questions 7 through 9 Thimphu Company prepared the following reconciliation between pretax financial accounting income and taxable income for the year ending December 31, 20X0, its first year of operations. Pretax Financial Accounting Income Estimated Litigation Expense Installment Sales Gross Profit Taxable Income 200,000 500,000 400,000) 300,000 The estimated litigation expense of $500,000 will be deductible in 20X2 when it is expected to be paid. The gross profit from the installment sales Will be...
Problem - 3 (Five Differences, Compute Taxable income and Deferred Taxes, Draft Income Statement) Wise Company began operations at the beginning of 2015. The following information pertains to this company. 1. Pretax financial income for 2015 is $100,000. 2. The tax rate enacted for 2015 and future years is 40%. 3. Differences between the 2015 income statement and tax return are listed below: (a) Warranty expense accrued for financial reporting purposes amounts to $7,000. Warranty deduc- tions per the tax...
(c) Problem 2. The following differences between financial and taxable income were reported by Dider Corporation for the year: (a) Excess of tax depreciation over book depreciation $10,000 (b) Interest revenue on municipal bonds 9,000 Excess of estimated warranty expense over actual expenditures 54,000 (d) Rent of next year paid 12.000 Fines paid 30,000 (t) Excess of income reported under percentage-of-completion accounting for financial reporting over completed-contract accounting used for tax reporting. 45,000 Interest on indebtedness incurred to purchase tax-exempt...
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