Questions 20 to 23 are based on the following information: On January 1, 2016, Telespace Inc. grants 12 million stock options to its employees. The stock options have exercise price of $20, which is equal to the grant-date price. All options will vest in three years. The grant date fair value of the options is $15 per option. All 12

Questions 20 to 23 are based on the following information: On January 1, 2016, Telespace Inc. grants 12 million stock options to its employees. The stock options have exercise price of $20, which is equal to the grant-date price. All options will vest in three years. The grant date fair value of the options is $15 per option. All 12

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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At the end of 2021, a company has a deferred tax asset with a balance of $480,000.The company has a valuation allowance account related to the deferred tax asset. The valuation account has a balance of $205,000 at the beginning of 2021. If it is more likely than not that all of the deferred tax asset will be realized, then (enter the number that represents the correct answer): income tax expense will be debited by $205,000. income tax expense will be credited by $205,000. deferred tax asset will be debited by $275,000 the valuation account will be credited by $205,000.
Shwonson Industries reported a deferred tax asset of $9.75 million for the year ended December 31, 2020, related to a temporary difference of $39 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax asset will reduce taxable income. There are no other temporary differences in 2020–2022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 15% beginning in 2022. (The rate remains 25% for 2021 taxes.) Taxable income in 2021 is $49 million. Required:1. Prepare the appropriate journal entry to record Shwonson’s income tax expense in 2021.2. What effect, will enacting the change in the 2022 tax rate, have on Shwonson’s 2021 net income?
Select the best answer to the tax credit and corporate and partnership income tax issues. Mamey, Inc. had taxable income of $138,500 in 2020. What is the income tax expense for the year 2020? a. $29,085 b. $25,623 c. $34,625 d. $27,700 Which of the following items might not generally appear on the Schedule M-1 reconciliation a. Exempt interest income b. Meal expenses c. Office material expenses d. Federal income tax expense Cubey Industries, Inc. has a net book income of $76,100. For the year it had an income tax expense of $18,900. During the year Cubey received pandemic exempt income of $5,000 and had total food expense of $1,000 on books. What is the result of the Schedule M-1 reconciliation per Schedule line 10. a. $81,600 b. $90,500 c. $95,500 d. $95,000 The net operating losses (NOLs) that a corporation has available to be used against taxable income for the year 2020 are subject to a. A limitation of 90% of taxable income b.…
Assume the following facts for Munoz Company in 2019. Munoz reported pretax financial income of $800,000. In addition, Munoz reported the following differences between its pretax financial income and taxable income:• Interest income of $80,000 was received during 2019 from an investment in municipal bonds. This income is exempt for tax purposes.• Rent income of $40,000 was collected in 2018 and included for tax purposes during that year. For financial statement purposes, it will be reported as earned equally in 2019 and 2020.• An asset with a 5-year life was purchased during 2019; straight-line depreciation for book purposes was $40,000. MACRS depreciation expense for 2019 was $100,000.• Warranty expense of $20,000 was recognized on the 2019 income statement, while $5,000 was recognized for tax purposes. (Assume a 1-year warranty contract.)The balance of the Deferred Tax Asset account (debit) at January 1, 2019, was $16,000 as a result of the rent income temporary difference. The tax…
Shwonson Industries reported a deferred tax asset of $5 million for the year ended December 31, 2020, related to a temporary difference of $20 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax asset will reduce taxable income. There are no other temporary differences in 2020–2022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 15% beginning in 2022. (The rate remains 25% for 2021 taxes.) Taxable income in 2021 is $30 million.Required:Determine the effect of the tax rate change and prepare the appropriate journal entry to record Shwonson’s income tax expense in 2021. What effect, if any, will enacting the change in the 2022 tax rate have on Shwonson’s 2021 net income?
This question is calculating the federal income tax withholding using the percentage method (Pre-2020 Form W-4)
Reported income taxes on its recently ended year (2021), income statement. Its balance sheet reported an amount of income taxes payable at end of the previous year (2020), and a greater amount (Increase) for the recently ended year (2021)How do you calculate what amount of cash payments were made for income taxes during the recently ended year (2021)?
Additional Information: - income tax expenses were included in other general expenses for the two years. tax expenses for 2022 were $15,650,000 and 2021 were $11,435,000. - income tax payable as of 31 December 2022 was included underneath Provisions section and amount was $2,950,000 REQUIRED : THIS SOCI IS WRONG PLEASE PREPARE THE RIGHT ONE
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Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions): Revenues Expenses Pretax accounting income (income statement) Taxable income (tax return) Tax rate: 25% 2024 $888 760 $128 $ 116 2025 $ 980 800 $ 180 $ 200 a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2024 for $60 million. The cost is tax deductible in 2024. 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 2024 and 2025 were $33 million and $35 million, respectively. Subscriptions included in 2024 and 2025 financial reporting revenues were $25 million ($10 million collected in 2023 but not recognized as revenue until 2024) and $33 million, respectively. (Hint: View this as two temporary differences-one reversing in 2024; one originating in 2024.) d. 2024 expenses included a $14 million unrealized loss from…
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