In its first year, Firm KZ recognized $467,250 ordinary business income and a $15,850 loss on the sale of an investment asset. In itssecond year, Firm KZ recognized $530,000 ordinary business income, a $21,500 Section 1231 gain, and a $8,200 Section 1231 loss ontwo sales of operating assets.Required:a. Compute KZ's book and taxable income for its first year.b. Using a 21 percent tax rate, compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of theyear.c. Compute KZ's book and taxable income for its second year.d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year.Complete this question by entering your answers in the tabs below.Req A and B Req C and Da. Compute KZ's book and taxable income for its first year.b. Using a 21 percent tax rate, compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the lastday of the year.Note: Round your final answers to the nearest whole dollar amount.a. Book incomea.Tax incomeb.AmountShow less A

Step 1: Compute KZ's book and taxable income for its first year. Book IncomeTax…

Answered: In its first year, Firm KZ recognized…

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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A-2
EzTech, a calendar year accrual basis corporation, generated $994,300 ordinary income from its business this year. It also sold the following assets, all of which were held for more than 12 months: Machinery Office equipment Warehouse Investment securities Investment land Accumulated Initial Basis Depreciation* $ 97,500 $ 39,660 50,000 12,470 163,500 21,620 72.700 n/a 350,000 n/a Sale Price $ 70,000 57,500 125,000 83,100 328,000 *Through date of sale. EzTech used the straight-line method to calculate depreciation on the warehouse and has no nonrecaptured Section 1231 losses. Required: a. Compute EzTech's taxable income. b. Recompute taxable income assuming that EzTech used the land in its business instead of holding it for investment.
Alpesh
During the current year, Dale Corporation sold a segment of its business at a gain of $315,000.Until it was sold, the segment had a current period operating loss of $112,500. The company had$1,275,000 from continuing operations for the current year.Prepare the lower part of the income statement, beginning with the $1,275,000 income fromcontinuing operations. Follow tax allocation procedures, assuming that all changes in incomeare subject to a 20% income tax rate. Disregard earnings per share disclosures. (Round all calculations to nearest dollar amount.)
Parry Corp. acquired new equipment for $2,400,000 in 20X6. For accounting purposes, the equipment will be depreciated over five years, straight-line, with a full year’s depreciation in the first year. For income tax purposes, Parry can take CCA over the next three years of $180,000 in 20X6, $324,000 in 20X7, and $261,000 in 20X8. Parry’s income tax rate is 34%.Required:For each 31 December 20X6 through 20X8, determine: (Enter your answers in thousands to two decimal places.)1. The tax basis for the equipment. 2. The accounting basis for the equipment. 3. The cumulative amount of the temporary difference relating to the equipment. 4. The balance of deferred income tax asset or liability that would be reported on the statement of financial position. 5. The amount of the deferred income tax adjustment.
4. A company establishes a depreciation account for an asset that is classified as Sec.1245property. The account is based on the MACRS with a life of seven years and an initial cost of$100,000. Without considerable of the sale of this asset, the company's taxable income is$400,000. Determine the following if the asset is sold after 5 years: a. The federal tax liability if the asset is sold for$15,000. b. The federal tax liability if the asset is sold for$160,000. c. The federal tax liability if the asset is sold for$90,000.
A company generates $500,000 of gross income during its tax year and incurs operating expenses of $25,000. Property taxes on business assets amount to $20,000. The total depreciation deductions for the tax year equal $80,000. What is the taxable income of this firm? a. $500,000 O b. $80,000 O. $124,000 O d. $375,000 If P= $1,000 and A = $188, and i% = 12% per year, then N=?? O a. 9 years O b. 8 years Ос 7years O d. 14 years
One year, a company makes a $6,109 investment in a historic building. The investment is not depreciable, but it does qualify for a one-time 20% of investment amount as tax credit. In that same year, revenue is $46,651 and expenses (exclusive of the investment cost) are 40% of revenue. The company pays a total of 53% in income taxes. What is the after-tax present worth of this year's activities if the company's interest rate for investment is 10% (only 4 significant digits are required in the answer/zero decimal places, with no units).
Eleven years ago, Lynn, Incorporated purchased a warehouse for $315,000. This year,the corporation sold the warehouse to Firm D for $80,000 cash and D’s assumption ofa $225,000 mortgage. Through date of sale, Lynn deducted $92,300 straight-linedepreciation on the warehouse.Required:.b. What is the character of this gain capital gain and ordiary gain?
[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
Munabhai
An entity reported the following information during the first year of operations: Pretax financial income 9,000,000 Nontaxable interest received 1,000,000 Long-term loss accrual in excess of deductible amount 1,500,000 Tax depreciation in excess of financial depreciation 2,000,000 Income tax rate 30% What is the total tax expense?

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