December 31, 2020: Income from Operations $302,000 Interest Revenue 72,000 Operating Expenses 248,000 Loss from sale of land 45,000 • During the year, the company suffered from abnormal and infrequent hurricane damages that had resulted in a $80,000 pretax tax loss • During the year also, the company stopped the activities of its BB segment which had resulted in a net of tax operating loss of $30,000 Based on the data above, the net extraordinary loss was: $80,000 $56,000 $24,000 O None of the above

December 31, 2020: Income from Operations $302,000 Interest Revenue 72,000 Operating Expenses 248,000 Loss from sale of land 45,000 • During the year, the company suffered from abnormal and infrequent hurricane damages that had resulted in a $80,000 pretax tax loss • During the year also, the company stopped the activities of its BB segment which had resulted in a net of tax operating loss of $30,000 Based on the data above, the net extraordinary loss was: $80,000 $56,000 $24,000 O None of the above

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Black Company, organized on January 2, 20X1, had pre-tax accounting income of $500,000 and taxable income of $800,000 for the year ended December 31, 20X1. The only temporary difference is accrued product warranty costs, which are expected to be paid as follows: 20X2 20X3 20X4 20X5 $100,000 50,000 50,000 100,000 Circumstances indicate that it is highly likely that Black will have taxable income in the future. It had no temporary differences in prior years. The enacted income tax rate is 21%. Required: 1. In Black's December 31, 20X1, balance sheet, how much should the deferred tax asset be? 2. Suppose that as of December 31, 20X1, a newly enacted law called for the tax rate to change to 25%, effective January 1, 20X3. Then what would be the amount of the deferred tax asset at December 31, 20X1?
The following were recognized during the current fiscal year by Kool Corporation: Loss on early extinguishment of noncurrent debt $30,000 Depreciation expense 18,000 Correction of understated expenses in the prior period 15,000 Losses related to a strike 24,000 Impairment of goodwill 3,400 What net amount of the above items should be included in income from continuing operations? A. $(72,000) $(51,400) $(90,400) D. $(75,400) B. C.
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Altima Corporation discovered an error in its 2020 financial statements. The firm recorded $4,200,000 in depreciation expense instead of record $4,500,000. Altima has a constant tax rate of 40% and reports 3 years of comparative income statements and 2 years of comparative balance sh- in its annual report. Ignoring the income tax effect, what is the correct journal entry to record the prior-period adjustment? O Depreciation expense Accumulated Depreciation O Retained Earnings 300,000 Income Tax Payable Accumulated Depreciation Retained Earnings O Accumulated Depreciation 300,000 Retained Earnings Accumulated Depreciation 300.000 estion 22 300,000 300,000 120.000 180,000 300,000 300,000
A chemical company has a total income of 1.62 million per year and total expenses of 716057 not including depreciation. At the start of the first year of operation, a composite account of all depreciable assets shows a value of 1.24 with a MACRS recovery period of 7 years, and a straight-line recovery period of 9.4 years. Thirty-five percent of all profits before taxes must be paid out for income taxes. What would be the reduction in income tax charges for the first year of operation if the MACRS method were used for the depreciation accounting instead of the straight-line method?-
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24. Horner Corporation has a deferred tax asset at December 31, 2015 of $80,000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 40% for 2012-2014; 35% for 2015; and 30% for 2016 and thereafter. Assuming that management expects that only 60% of the related benefits will actually be realized, a valuation account should be established in the amount of: a. $80,000 b. $32,000 c. $28,000 d. $24,000
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