Luong Corporation, a calendar year, accrual basis corporation, reported $1.65 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 $213,000. Luong's book income included $23,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $10,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. Luong recognized $23,000 of capital losses this year and no capital gains. Luong recorded $14,600 of book expense for meals not provided by a restaurant and $16,500 of book expense for entertainment costs. • Luong's depreciation expense for book purposes totaled $413,000. MACRS depreciation was $475,000. Required: 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 $1.65 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 $213,000. Luong's book income included $23,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $10,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. Luong recognized $23,000 of capital losses this year and no capital gains. Luong recorded $14,600 of book expense for meals not provided by a restaurant and $16,500 of book expense for entertainment costs. • Luong's depreciation expense for book purposes totaled $413,000. MACRS depreciation was $475,000. Required: 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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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D.7.
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