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Luong Corporation, a calendar year, accrual basis corporation, reported $1 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: . Luong's federal income tax expense per books was $200,000. Luong's book income included $10,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $4,000 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. Luong recognized $10,000 of capital losses this year and no capital gains. . . Luong recorded $8,000 of book expense for meals not provided by a restaurant and $10,000 of book expense for entertainment costs. . Luong's depreciation expense for book purposes totaled $400,000. MACRS depreciation was $475,000. . a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income.

Luong Corporation, a calendar year, accrual basis corporation, reported $1 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: . Luong's federal income tax expense per books was $200,000. Luong's book income included $10,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $4,000 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. Luong recognized $10,000 of capital losses this year and no capital gains. . . Luong recorded $8,000 of book expense for meals not provided by a restaurant and $10,000 of book expense for entertainment costs. . Luong's depreciation expense for book purposes totaled $400,000. MACRS depreciation was $475,000. . a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income.

FINANCIAL ACCOUNTING
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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12. Luong Corporation, a calendar year, accrual basis corporation, reported $1 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: . Luong's federal income tax expense per books was $200,000. Luong's book income included $10,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $4,000 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. . Luong recognized $10,000 of capital losses this year and no capital gains. Luong recorded $8,000 of book expense for meals not provided by a restaurant and $10,000 of book expense for entertainment costs. Luong's depreciation expense for book purposes totaled $400,000. MACRS depreciation was $475,000. ● ● ● a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income.
Transcribed Image Text:12. Luong Corporation, a calendar year, accrual basis corporation, reported $1 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: . Luong's federal income tax expense per books was $200,000. Luong's book income included $10,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $4,000 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. . Luong recognized $10,000 of capital losses this year and no capital gains. Luong recorded $8,000 of book expense for meals not provided by a restaurant and $10,000 of book expense for entertainment costs. Luong's depreciation expense for book purposes totaled $400,000. MACRS depreciation was $475,000. ● ● ● a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income.
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