Exercise 1-16A (Algo) Applications of the Sarbanes-Oxley Act LO 1-6The CFO of the Munoz Microscope Corporation intentionally misclassified a downstream transportation expense in the amount of$649,900 as a product cost in an accounting period when the company made 9,700 microscopes and sold 6,600 microscopes. Munozrewards its officers with bonuses that are based on net earnings.Requireda. Indicate whether the elements on the financial statements (i.e., assets, liabilities, equity, revenue, expense, and net income) wouldbe overstated or understated as a result of the misclassification of the downstream transportation expense. Determine the amountof the overstatement or understatement for each element.Note: If there is no effect, select "Not affected" from the dropdown provided. Enter all answers as positive values.AssetsLiabilitiesRetained earningsRevenueExpenseNet income

Scenario:The CFO of Munoz Microscope Corporation misclassified a downstream transportation expense…

Answered: Exercise 1-16A (Algo) Applications of…

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 47P

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Nonrecurring Items Lynn Company sells a component of its business in the middle of the year. On the date of sale, the net proceeds received were less than the aggregate book value of the components net assets. The component was operating at a loss from the beginning of the year. In addition, Lynn had one of its manufacturing plants destroyed by an earthquake during the year. Earthquakes are not uncommon in Lynns operating environment. Required: 1. Explain how Lynn should report discontinued operations of a component of its business on its income statement for this year. Do not discuss earnings per share requirements. 2. Explain how Lynn should report the loss from the earthquake on its income statement for this year. Do not discuss earnings per share requirements.
Title VII limits the amount of damages a plaintiff may recover against an employer with fewer than 100 employees to Oa. $25,000 Ob. $50,000 Oc. $75,000 Od. $100,000
Question 6 The following income received by officials and employees in the public sector are not subject to income tax and withholding tax on compensation, except The excess of the 13th month pay and other benefits paid or accrued during the year over P90,000 Representation and transportation allowance (RATA) granted under the General Appropriations Act Personnel Economic Relief Allowance (PERA) granted to government personnel Monetized value of leave credits paid to government officials and employees Question 7 S1: Gross income exclusion are flow of wealth to taxpayers which are not considered as part of gross income f
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1. What amount should be recorded as accrued liability on December 31, 2021 in relation to this event? A. 1,500,000 B. 2,500,000 C. 1,000,000 D. 0 E. None of them
Intermediate Accounting ll ch 16 5. On January 1, 2021, Ameen Company purchased major pieces of manufacturing equipment for a total of $48 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2023, the book value of the equipment was $42 million and its tax basis was $32 million. At December 31, 2024, the book value of the equipment was $40 million and its tax basis was $25 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $30 million. Required: Prepare the appropriate journal entry to record Ameen’s 2024 income taxes. Assume an income tax rate of 25%. What is Ameen’s 2024 net income?
Problem 11-5 (Algorithmic)Special Deductions and Limitations (LO 11.3) Fisafolia Corporation has gross income from operations of $423,000 and operating expenses of $359,550 for 2021. The corporation also has $42,300 in dividends from publicly-traded domestic corporations in which the ownership percentage was 45 percent. Below is the Dividends Received Deduction table to use for this problem.
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Read the following information to answer questions 2.1 - 2.2. LA Fashion has credit sales of $6,400,000 for the financial year ending June 30, 2021, and estimates at the end of the financial year that five per cent of accounts receivable will not be received. Accounts receivable total $3,100,000. The corporation uses the allowance method to account for bad debts, based on the percentage of receivables approach.
Problem 20-12 (Algo) Accounting changes and error correction; seven situations; tax effects ignored [LO20-1, 20-2, 20-3, 20-4, 20-6] Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2009 by two talented engineers with little business training. In 2021, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries were prepared. A five-year casualty insurance policy was purchased at the beginning of 2019 for $37,500. The full amount was debited to insurance expense at the time. Effective January 1, 2021, the company changed the salvage value used in calculating depreciation for its office building. The building cost $640,000 on December 29, 2010, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $120,000. Declining real estate values in the area…
PROBLEM 1 The following differences enter into the reconciliation of accounting and taxable profit of BLACKPINK Company for the year ended December 31, 2021, its first year of operations. Life insurance expense 100,000 Excess tax depreciation 2,000,000 Warranty expense 200,000 Litigation accrual Unamortized computer software 500,000 3,000,000 Unearned rent income deferred on the books but appropriately recognized in taxable profit Interest income from long-term certificate of deposit 400,000 200,000 Additional information: On July 1, 2021, BLACKPINK paid insurance premium of P200,000 on the life of an a. officer with BLACKPINK Company as beneficiary. b. Excess tax depreciation will reverse equally over a four-year period, 2022-2025. c. The warranty liability is the estimated warranty cost that was recognized as expense in 2021 but deductible for tax purposes when actually paid. d. It is estimated that the litigation liability will be paid in 2025. In January 2021, BLACKPINK Company…
UNGER COMPANY

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