Rose Inc. reported income before taxes of $750,000 for its first year of operations. This includes: • Depreciation on new machinery purchased in January for $400,000, with no salvage value and a 4-year useful life (for tax purposes depreciation was 25% of the historical cost) ⚫ Insurance expense of $45,000, of which only $15,000 was paid this year (the remainder will be paid next year) • Unpaid penalties of $18,000 What is Rose Inc.'s taxable income? a. $750,000 b. $798,000 c. $728,000 d. $768,000
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- A piece of equipment purchased at a cost $250,000 generated new income of $80,000 per year, witha annual operating costs of $10,000. The equipment was depreciated using MACRS method as 7-year property. At the end of five years, the management decided to sell the equipment for a modest price of $75,000. The company pays taxes at an effective tax rate of 23%. Which of the following was closest to the amount of taxes the company paid in year 5? $15,000 $8,000 $33,000 $11,000Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $780,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $880,000, which includes interest revenue of $25,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes.Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $840,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $960,000, which includes interest revenue of $28,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 Record the income tax expense. Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Income tax expense Deferred tax liability Income tax payable
- Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $600,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% In those years. Pretax accounting Income the first year the equipment was used was $700,000, which includes interest revenue of $15,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting Income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. Note: If no entry is required for a transaction/event, select "No Journal entry required" In the first account field. View transaction list View journal entry worksheet No 1 Transaction General Journal Income tax expense Income tax payable Deferred tax liability Debit Credit 171,250Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $540,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $640,000, which includes interest revenue of $12,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%.Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $720,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $820,000, which includes interest revenue of $22,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
- Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $880,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $1,000,000, which includes interest revenue of $30,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Transaction General Journal 1 1 Income tax expense Deferred tax liability Income tax payable Debit Credit 33,000Burrell Company purchased a machine for $10,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $5,000 each year. The tax rate is 20%. Compute the rate of return earned on the average net asset value by the company each year of the asset's life under the double declining balance depreciation method for the following years: 2019: 2020: 2021: 2022: 2023:Infinity Production acquired a new machine at the beginning of the current year. The machine cost $900,000 with no residual value expected. Infinity uses the straight-line method for financial reporting, assuming a 6-year useful life. The firm classifies the equipment as 5-year MACRS property for tax purposes using the following percentages. Year MACRS (%) 1 20.00% 2 32.00 3 19.20 4 11.52 5 11.52 6 5.76 The company is subject to a 25% income tax rate and has no other book-tax differences. Income before depreciation and tax is presented below: Year Income before Tax and Depreciation 1 $370,000 2 420,000 3 490,000 4 700,000 5 820,000 6 950,000 What is Infinity's income tax expense for year 1?
- Infinity Production acquired a new machine at the beginning of the current year. The machine cost $900,000 with no residual value expected. Infinity uses the straight-line method for financial reporting, assuming a 6-year useful life. The firm classifies the equipment as 5-year MACRS property for tax purposes using the following percentages. Year MACRS (%) 1 20.00% 2 32.00 3 19.20 4 11.52 5 11.52 6 5.76 The company is subject to a 20% income tax rate and has no other book-tax differences. Income before depreciation and tax is presented below: Year Income before Tax and Depreciation 1 $450,000 2 500,000 3 570,000 4 700,000 5 820,000 6 950,000 What is Infinity's deferred tax asset or deferred tax liability at the end of year 3? Group of answer choices $38,160 deferred tax liability $2760 deferred tax liability $2760 deferred tax asset $38,160 deferred tax asset PreviousNextEarly in January 2021, DeVille Company purchased machinery costing $700,000. For financial reporting purposes, DeVille Company has a December 31st year end and uses straight-line depreciation. DeVille estimates the useful life of this machinery to be four years with no residual value. For tax purposes, the deduction is 40%, 30%, 20%, and 10% over the life of the machinery. Pretax accounting income for 2021 was $800,000, which includes interest revenue of $21,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record the 2021 provision for income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)A company purchases a machine with an expected useful life of 6 years for $9,000. After two years of use, management revised the expected useful life to 8 years. The machine is to be depreciated at 30% per annum on the reducing balance basis. A full year's depreciation is charged in the year of purchase, with none in the year of sale. During year 4, it is sold for $3,000. What is the profit or loss on disposal? A $1,000 profit B $87 loss C $1,410 profit D $840 profit

