Li Corporation reported pretax book income of $690,000. Tax depreciation exceeded book depreciation by $418,000. Li's beginning book (tax) basis in its fixed assets was $1,990,000 ($1,772,000) and its ending book (tax) basis is $1,890,000 ($1,308,000). In addition, the company received $390,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $82,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit. Note: Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit. Deferred income tax expense

Li Corporation reported pretax book income of $690,000. Tax depreciation exceeded book depreciation by $418,000. Li's beginning book (tax) basis in its fixed assets was $1,990,000 ($1,772,000) and its ending book (tax) basis is $1,890,000 ($1,308,000). In addition, the company received $390,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $82,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit. Note: Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit. Deferred income tax expense

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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1. ACE Company had pretax GAAP income of $50,000 for the tax year ended December 31. Label each of the following items as either Deferred Tax Liabilities (DTL) or Deferred Tax Assets (DTA) 1. Excess accelerated depreciation for tax purposes, $5,000 2. Unrealized holding gain on securities accounted for under FV-NI, $2,000 3. Unrealized holding loss on securities accounted for under FV-NI, $2,000 4. Rental receipts received in advance, $30,000 5. Litigation contingency accrual, $10,000 6. Six-month prepaid rent deposit, $12,000 40.000 5 2.80
Grand Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In addition, the company received $300,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $50,000. Grand's beginning book (tax) basis in its fixed assets was $2,000,000 ($1,800,000) and its ending book (tax) basis is $2,500,000 ($1,900,000). Compute the company's current income tax expense or benefit. Note: Leave no answer blank. Enter N/A or zero. Current income tax Deferred income tax N/A $ expense
At December 31, DePaul Corporation had a $16 million balance in its deferred tax asset account and a $68 million balance in its deferred tax liability account. The balances were due to the following cumulative temporary differences: 1. Estimated warranty expense, $15 million: expense recorded in the year of the sale; tax-deductible when paid (one-year warranty). 2. Depreciation expense, $120 million: straight-line in the income statement; MACRS on the tax return. 3. Income from installment sales of properties, $50 million: income recorded in the year of the sale; taxable when received equally over the next five years. 4. Rent revenue collected in advance, $25 million; taxable in the year collected; recorded as income when earned the following year. Required: Show how any deferred tax amounts should be classified and reported in the December 31 balance sheet. The tax rate is 40%.
TGW, a calendar year corporation, reported $4,088,000 net income before tax on its financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • TGW's depreciation expense per books was $463,000, and its MACRS depreciation deduction was $385,400. TGW capitalized $693,000 indirect expenses to manufactured inventory for book purposes and $832,000 indirect expenses to manufactured inventory for tax purposes. TGW's cost of manufactured goods sold was $2,572,000 for book purposes and $2,668,000 for tax purposes. • Four years ago, TGW capitalized $2,340,000 goodwill when it purchased a competitor's business. This year, TGW's auditors required the corporation to write the goodwill down to $1,575,000 and record a $765,000 goodwill impairment expense. Required: Compute TGW's taxable income. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.) TGW's net book income before tax Adjustments:…
Haresh G
During the year, Belyk Paving Co. had sales of $2,600,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,535,000, $465,000, and $520,000, respectively. In addition, the company had an interest expense of $245,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) (Enter your answer as directed, but do not round intermediate calculations.) Required: (a) What is Belyk's net income? (Negative amount should be indicated by a minus sign.) Net income (b) What is Belyk's operating cash flow? Operating cash flow A
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Li Corporation reported pretax book income of $660,000. Tax depreciation exceeded book depreciation by $412, 000. Li's beginning book (tax) basis in its fixed assets was $1,960,000 ($1,748, 000) and its ending book (tax) basis is $1,860,000 ($1, 272, 000). In addition, the company received $360, 000 of tax-exempt municipal bond interest. The company's prior - year tax return showed taxable income of $49,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit.
In its first year of operations, HD Corporation reported pretax accounting income of $820 million for the current year. Depreciation reported in the tax return in excess of depreciation in the income statement was $1,020 million. The excess tax will reverse itself evenly over the next three years. The current year's tax rate of 25% will be changed under the current law to 30% next year and 35% for all subsequent years. At the end of the current year, the deferred tax liability related to the excess depreciation for HD Corp, will be: Multiple Choice $340 million $306 million $408 million $357 million
am.115.
Sol Limited. reported earnings of $510,000 in 20X8. The company has $91,000 of depreciation expense this year, and claimed CCA of $142,000. The tax rate was 25%. At the end of 20X7, there was a $122,000 loss carryforward that was not recorded because use was considered less than probable. The company also reported a deferred tax liability of $71,000 caused by capital assets with a net book value of $1,310,000 and UCC of $1,010,000. The tax rate had been 20% in 20X7. Required:What is the amount of income tax expense in 20X8? Prepare the income tax entry or entries. - Record the entry income tax expense. - Record the entry loss carryforward.
Tuna Corporation reported pretax book income of $1,017,000. During the current year, the net reserve for warranties increased by $33,500. In addition, book depreciation exceeded tax depreciation by $117,000. Finally, Tuna subtracted a dividends received deduction of $23,500 in computing its current-year taxable income. Book equivalent of taxable income is: