Hilton earned $80,000 each year from the booking activities (main operation) and $30,000 from the laundry section. The total recognized operational expenses for the taxation purposes were $50,000. The company provided you with all the necessary documents to prepare the taxation report for them. After analyzing the documents, you found the following: A. $10,000 of the expenses occurred and were paid last year. B. $5,000 of the earned revenues from the booking activities related to canceled and refunded revenues to the customers. If the taxation law has the following instruction for preparing the taxation reports. I. First $15,000 of the total revenue will be free entitled of 5% discount from the tax. II. The company will receive an allowance because of their environmental activities of $7,000 from the total taxable income. III. The company will receive a 10% allowance from the total revenue after deducting the operational expenses. Instruction: 1. Determine whether the case is tax evasion or avoidance. 2. Calculate the total accurate revenues and expenses. 3. Calculate the total taxable income. 4. Calculate the tax if the tax rate was 20%.

Hilton earned $80,000 each year from the booking activities (main operation) and $30,000 from the laundry section. The total recognized operational expenses for the taxation purposes were $50,000. The company provided you with all the necessary documents to prepare the taxation report for them. After analyzing the documents, you found the following: A. $10,000 of the expenses occurred and were paid last year. B. $5,000 of the earned revenues from the booking activities related to canceled and refunded revenues to the customers. If the taxation law has the following instruction for preparing the taxation reports. I. First $15,000 of the total revenue will be free entitled of 5% discount from the tax. II. The company will receive an allowance because of their environmental activities of $7,000 from the total taxable income. III. The company will receive a 10% allowance from the total revenue after deducting the operational expenses. Instruction: 1. Determine whether the case is tax evasion or avoidance. 2. Calculate the total accurate revenues and expenses. 3. Calculate the total taxable income. 4. Calculate the tax if the tax rate was 20%.

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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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Hilton earned $80,000 each year from the booking activities
(main operation) and $30,000 from the laundry section. The
total recognized operational expenses for the taxation purposes
were $50,000. The company provided you with all the necessary
documents to prepare the taxation report for them. After
analyzing the documents, you found the following:
A. S10,000 of the expenses occurred and were paid last
year.
B. $5,000 of the earned revenues from the booking
activities related to canceled and refunded revenues to
the customers.
If the taxation law has the following instruction for preparing
the taxation reports.
I. First S15,000 of the total revenue will be free entitled of
5% discount from the tax.
II. The company will receive an allowance because of their
environmental activities of $7,000 from the total
taxable income.
III. The company will receive a 10% allowance from the
total revenue after deducting the operational expenses.
Instruction:
1. Determine whether the case is tax evasion or avoidance.
2. Calculate the total accurate revenues and expenses.
3. Calculate the total taxable income.
4. Calculate the tax if the tax rate was 20%.

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