Denver Co. at the end of 20x1, its first year of operations, prepared reconciliation between pretax financial income and taxable income as follows: Pretax financial income $300,000 Extra depreciation taken for tax purposes 900,000 Estimated litigation expenses deductible for taxes when paid 1,500,000 Rent collected on the tax return is greater than rent reported on the income statement by $220,000 Interest income from Denver municipal bonds 100,000 Use of the depreciable assets will result in taxable amounts of $300,000 in each of the next three years. The estimated litigation expenses of $1,500,000 will be deductible in 20x4 when settlement is expected. a) Compute the taxable income. [general account]

Denver Co. at the end of 20x1, its first year of operations, prepared reconciliation between pretax financial income and taxable income as follows: Pretax financial income $300,000 Extra depreciation taken for tax purposes 900,000 Estimated litigation expenses deductible for taxes when paid 1,500,000 Rent collected on the tax return is greater than rent reported on the income statement by $220,000 Interest income from Denver municipal bonds 100,000 Use of the depreciable assets will result in taxable amounts of $300,000 in each of the next three years. The estimated litigation expenses of $1,500,000 will be deductible in 20x4 when settlement is expected. a) Compute the taxable income. [general account]

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter3: Taxes On The Financial Statements

Section: Chapter Questions

Problem 22P

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Zeff Company prepared the following reconciliation for the · first year of operations: 1,600,000 Pretax financial income Nontaxable interest received Long-term loss accrual in excess of deductible amount Depreciation in excess of financial depreciation ( 50,000) 100,000 ( 250,000) 1,400,000 Taxable income (Tax rate is 30%) What amount should be reported as total income tax expense? a. 495,000 b. 480,000 c. 465,000 d. 420,000 What amount should be reported as deferred tax liability a. 90,000 b. 45,000 с. 75,000 d. 30,000 What amount should be reported as deferred tax asset? a. 30,000 b. 90,000 c. 45,000 d. 75,000
Bee Corp. prepared the following reconciliation between book income and taxable income for the year ended December 31, 20x0: Pretax accounting income 500,000 Taxable income 300,000 Difference 200,000 Interest on municipal bonds 50,000 Lower depreciation per financial statements 150,000 Total differences 200,000 Bee's effective income tax rate for 20x0 is 30%. The depreciation difference will reverse equally over the next three years at enacted tax rates as follows: Years Tax rates 20x1 30% 20x2 25% 20x3 25% In Bee's 20x0 financial statements, the deferred portion of its provision for income taxes should be 40,000 50,000 45,000 60,000
Bee Corp. prepared the following reconciliation between book income and taxable income for the year ended December 31, 20x0: Pretax accounting income 500,000 Taxable income 300,000 Difference 200,000 Interest on municipal bonds 50,000 Lower depreciation per financial statements 150,000 Total differences 200,000 Bee's effective income tax rate for 20x0 is 30%. The depreciation difference will reverse equally over the next three years at enacted tax rates as follows: Years Tax rates 20x1 30% 20x2 25% 20x3 25% In Bee's 20x0 income statement, the current portion of its provision for income taxes should be 125,000 150,000 75,000 90,000
Among the items reported on Neal Corporation's income statement for the year ended December 31, year 3, are the following: Interest received on municipal bonds $10,000 Penalties and related interest 18,000 Temporary differences for measuring deferred taxes (interperiod tax allocation) amount to O $10,000 O $0 O $18,000 O $28,000
Broncos Co. reports pretax financial income of $70,000 for 20x1. The following items cause taxable income to be different than pretax financial income: Depreciation on the tax return is greater than depreciation on the income statement by $15,000. Rent collected on the tax return is greater than rent earned on the income statement by $20,000. Interest income from Denver municipal bonds $12,000 Broncos’ tax rate is 30% for all years and the company expects to report taxable income in all future years. Compute taxable income for 20x1. Show your computation. No credit if not. Prepare the journal entry to record income tax expense, deferred income tax, and income tax payable for 20x1. Compute net income for 20x1.
1. Pine Corporation’s books showed pretax income of P600,000 for the year ended December 31, 20x1. In the computation of federal income taxes, the following data were considered: Gain on involuntary conversion (expropriation) P350,000 Depreciation deducted for tax purposes in excess of depreciation deducted for book purposes 50,000 Estimated tax payments during 20x1 70,000 Income tax rate 30% What amount should Pine report as its current income tax liability on its December 31, 20x1, balance sheet?
At the end of the year, Falabella Co. has pretax financialincome of $550,000. Included in the $550,000 is $70,000interest income on municipal bonds, $25,000 fine fordumping hazardous waste, and depreciation of $60,000.Depreciation for tax purposes is $45,000. Compute incometaxes payable, assuming the tax rate is 30% for all periods.
[Fact Pattern #1] Zeff Co. prepared the following reconciliation of its pretax financial statement income to taxable income for the current year, its first year of operations: Pretax financial income $160,000 Nontaxable interest received on municipal securities Long-term loss accrual in excess (5,000) of deductible amount 10,000 Depreciation in excess of financial statement amount (25,000) Taxable income $140,000 Zeff's tax rate is 40%. [1] ( Refers to Fact Pattern 1) In its current-year income statement, what amount should Zeff report as income tax expense – current portion? A. $52,000 B. $56,000 C. $62,000 D. $64,000
An entity provided the following net of tax figures for the current year: Net income 7,700,000 Net remeasurement loss on defined benefit plan 300,000 Unrealized gain on FA@FVOCI 1,500,000 Reclassification adjustment for gain on sale of 250,000 FA@FVOCI included in the net income Share warrants outstanding 400,000 Cumulative effect of change in accounting 500,000 policy - credit Interest revenue 100,000 Equity in associate's earnings 300,000 Prior period error - underdepreciation 200,000 What is the comprehensive income for the current year? A. 8,650,000 B. 8,900,000 C. 8,950,000 D. 9,050,000
For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 300,000 Permanent difference (15,000 ) 285,000 Temporary difference-depreciation (20,000 ) Taxable income $ 265,000 Tringali's tax rate is 40%. Assume that no estimated taxes have been paid. What should Tringali report as income tax payable for its first year of operations? a.$8,000 b.$120,000 c.$106,000 d.$114,000
1. Given the following information, calculate the tax liability for year 1. The Net Operating Income is $97,200. Capital Expenditure is $8,500. Interest is $51,219. Principal is $8,852. Depreciation $21,662. Amortized Financing Costs is 792. Ordinary tax rate is 35%. $26,059 $9,488 $11,209 $27,640
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