Oriole, Inc. had pre-tax accounting income of $3000000 and a tax rate of 20% in 2025, its first year of operations. In 2025, the company had the following transactions: Received rent from Sandra, Co. for 2026 $99000 Municipal bond income 123000 Depreciation for tax purposes in excess of book depreciation 63000

Oriole, Inc. had pre-tax accounting income of $3000000 and a tax rate of 20% in 2025, its first year of operations. In 2025, the company had the following transactions: Received rent from Sandra, Co. for 2026 $99000 Municipal bond income 123000 Depreciation for tax purposes in excess of book depreciation 63000

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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Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 888 $ 980 Expenses Pretax accounting income (income statement) Taxable income (tax return) 760 800 $ 128 $ 116 $ 180 $ 200 Tax rate: 25% a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2021 for $60 million. The cost is tax deductible in 2021. b. Expenses include $2 million insurance premiums each year for life insurance on key executives. c. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2021 and 2022 were $33 million and $35 million, respectively. Subscriptions included in 2021 and 2022 financial reporting revenues were $25 million ($10 million collected in 2020 but not recognized as revenue until 2021) and $33 million, respectively. Hint View this as two temporary differences-one reversing in 2021; one originating in 2021. d. 2021 expenses included a $14 million unrealized loss from reducing…
Lillian Farms reported a net operating loss of $240,000 for financial reporting and tax purposes in 2019. The enacted tax rate is 25 %. Taxable income, tax rates, and income taxes paid in Lillian's first two years of operation were as follows: 2017...$100,000...40% 2018...$60,000...25% Assume NOL is allowed to carryback for two years, the amount of net loss reported on the income statement for the year ended December 31, 2019 would be: a) $ (180,000). b) $(175,000). c) 9(165,000). d) $(155,000).
For the year ended December 31, 2024, Fidelity Engineering reported pretax accounting income of $988,000. Selected information for 2024 from Fidelity's records follows: Interest income on municipal governmental bonds $ 44,000 Depreciation claimed on the 2024 tax return in excess of depreciation on the income statement Carrying amount of depreciable assets in excess of their tax basis at year-end Warranty expense reported on the income statement 68,000 112,000 32,000 Actual warranty expenditures in 2024 22,000 Fidelity's income tax rate is 25%. At January 1, 2024, Fidelity's records indicated balances of zero and $11,000 in its deferred tax asset and deferred tax liability accounts, respectively. Required: Determine the amounts necessary to record income taxes for 2024, and prepare the appropriate journal entry. What is Fidelity's 2024 net income?
Use this information for parts A and B. In 2026, Goodfellas Company reported pretax GAAP income of $400,000. During 2026, Goodfellas had the following differences between GAAP and tax: Recognized $100,000 installment sale revenue under GAAP in 2026. This revenue will be recognized for tax purposes in equal amounts over the next four years. Recognized $50,000 of depreciation in 2026 for tax. Starting in 2027, GAAP depreciation is $10,000 per year for the next five years. Received $100,000 in unearned rent revenue in 2026. Rent will be earned in equal amounts in 2027 and 2028. The tax rate for 2026 is 30 percent and 20 percent thereafter. A) What journal entry does Goodfellas record for taxes in 2026?
Wynn Farms reported a net operating loss of $160,000 for financial reporting and tax purposes in 2024. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows: Taxable Income Tax Rates Income Taxes Paid 2020 $ 75,000 20% $ 15,000 2021 85,000 20 17,000 2022 140,000 25 35,000 2023 75,000 40 30,000 Required: Prepare the journal entry to recognize the income tax benefit of the net operating loss. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well as some farm-related businesses. Assume Wynn is one of those businesses. Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss.
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Please show each step of calculation. Thanks in advance.
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Skysong Corporation had the following tax information. Year Taxable Income Tax Rate Taxes Paid 2023 $276,000 35 % $96,600 2024 299,000 30 89,700 2025 368,000 30 110,400 In 2026, Skysong suffered a net operating loss of $441,600, which it elected to carryback. The 2026 enacted tax rate is 29%. Prepare Skysong's entry to record the effect of the loss carryback. (List debit entry before credit entry. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles enter O for the amounts.) Account Titles and Explanation Debit Credit
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