Jefferson Millinery Inc. (JMI) decided to liquidate its wholly owned subsidiary, 8 Miles High Inc. (8MH).8MH had the following tax accounting balance sheet: (Leave no answer blank. Enter zero if applicable.)CashBuildingLandTotalFMV$ 265,00078,000187,000$530,000AdjustedBasisS$Appreciation265,00034,500120,500420,00043,50066,500$ 110,000a. What amount of gain or loss does 8MH recognize in the complete liquidation?b. What amount of gain or loss does JMI recognize in the complete liquidation?c. What is JMI's tax basis in the building and land after the complete liquidation?

Liquidation -The closing of a company or business division is known as liquidation. To settle debts…

Answered: Jefferson Millinery Inc. (JMI) decided…

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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On June 30, Pronghorn Corp discontinued its operations in Mexico. During the year, the operating income was $270,000 before taxes. On September 1, Pronghorn disposed of the Mexico facility at a pretax loss of $670,000. The applicable tax rate is 30%. Show the discontinued operations section of Pronghorn’s income statement. PRONGHORN CORPPartial Income Statement select an opening section name enter an income statement item $enter a dollar amount enter an income statement item $enter a dollar amount $enter a total dollar amount
Required information [The following information applies to the questions displayed below.] Hafnaoui Company reported pretax net income from continuing operations of $1,136,000 and taxable income of $678,500. The book-tax difference of $457,500 was due to a $305,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $122,000 due to an increase in the reserve for bad debts, and a $274,500 favorable permanent difference from the receipt of life insurance proceeds. At the end of the year, the reserve for bad debts had a balance of $152,500, the beginning balance in the account was $30,500. Hafnaoul's beginning book (tax) basis in its fixed assets was $1,042,000 ($863,000) and its ending book (tax) basis is $1,605,000 ($1,121,000). b. Compute Hafnaoul Company's deferred income tax expense or benefit. N Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit. Deferred income tax expense
The Walston Company is to be liquidated. It has the following liabilities: Income taxes Notes payable (secured by land) Accounts payable Salaries payable (evenly divided between two employees) Bonds payable Administrative expenses for liquidation The company has the following assets: $ 7,600 136,000 93,000 14,000 78,000 28,000 Book Value Fair Value Current assets $ 88,000 Land 108,000 Buildings and equipment 108,000 $ 43,000 98,000 132,000 Required: How much money will the holders of the notes payable collect following liquidation? Total amount collected
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For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 210,000 Permanent difference (14,700 ) 195,300 Temporary difference-depreciation (20,200 ) Taxable income $ 175,100 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as its income tax expense for its first year of operations? $52,500. $48,825. $43,775. $5,050.
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Grand Corporation reported pretax book income of $621,000. Tax depreciation exceeded book depreciation by $414,000. In addition, the company received $310,500 of tax-exempt municipal bond interest. The company’s prior-year tax return showed taxable income of $51,750. Compute the company's current income tax expense or benefit. (Leave no answer blank. Enter N/A or zero.) Current income tax N/A $0 Deferred income tax Expense ?
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6. Scott Corp. received cash of P20,000 that was included in revenues in its 20x4 financial statements, of which P12,000 will not be taxable until 20x5. Scott's enacted tax rate is 30% fo 20x4, and 25% for 20x5. What amount should Scott report in its 20x4 balance sheet for deferred income tax liability? d. 3,600 b. 2,400 с. 3,000 a. 2,000 (AICPA)

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