Sunland Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $1380000 Estimated litigation expense 3300000 Installment sales (2640000) Taxable income $2040000 The estimated litigation expense of $3300000 will be deductible in 2022 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1320000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1320000 current an $1320000 noncurrent. The income tax rate is 20% for all years. The income tax expense is O $1320000. O $276000. O $660000. O $408000.

Sunland Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $1380000 Estimated litigation expense 3300000 Installment sales (2640000) Taxable income $2040000 The estimated litigation expense of $3300000 will be deductible in 2022 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1320000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1320000 current an $1320000 noncurrent. The income tax rate is 20% for all years. The income tax expense is O $1320000. O $276000. O $660000. O $408000.

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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Information concerning Johnston Co.'s direct materials costs is as follows: Standard price per pound $ 8.35 Actual quantity purchased 3,580 pounds Actual quantity used in production 3,480 pounds Units of product manufactured 890 Materials purchase-price variance–favorable $ 1,045 Budget data for the period: Units to manufacture 1,190 Units of direct materials 4,760 pounds The actual purchase price per pound of direct materials (rounded to two decimal places) was: Multiple Choice $8.06. $8.02. $9.01. $8.39. $8.64.
On January 1, 2020, Physanto Corp. received in exchange for equipment sold to Viva Inc., an 8% $500,000 note that matures in January 2024. The market rate of interest for similar notes is 12%. Interest is received semi-annually each July 1 and January 1. Round all values to the nearest whole number. Required: A. Complete the partial amortization schedule provided. Place zero in any field that does not require a computed value.
Pharoah Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $1320000 Estimated litigation expense 3200000 Installment sales (2560000) Taxable income $1960000 The estimated litigation expense of $3200000 will be deductible in 2022 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1280000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1280000 current and $1280000 noncurrent. The income tax rate is 20% for all years.The deferred tax asset to be recognized is $128000 current. $640000 noncurrent. $0. $128000 noncurrent.
ABC Corporation prepared the following reconciliation for its first year of operations:· Pretax financial income for 2020- P1,200,000· Tax exempt interest- P100,000· Taxable temporary difference - P300,000The temporary difference will reverse evenly over the next two years at an enacted tax rate of 40%. The enacted tax rate for 2020 is 28%. What amount should be reported in its 2020 income statement as the current portion of its provision for income taxes?
At the beginning of 2021, VHF Industries acquired a machine with a fair value of $6,774,420 by issuing a four-year, noninterest-bearing note in the face amount of $8 million. The note is payable four annual installments of $2 million at the end of each year. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. What is the effective rate of interest implicit in the agreement? 2. to 4. Prepare the necessary journal entries. When recording the issuance of the installment note record it at its net book value in a single note payable (or receivable) account (no Discount). 5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar risk was 12%. Prepare the journal entry to record the purchase of the machine. Complete this question by entering your answers in the tabs below. Required 1 Required 2 to 4 Interest rate What is the effective…
The estimated litigation expense of $2,000,000 will be deductible in 2016 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $800,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $800,000 current and $800,000 noncurrent. The income tax rate is 40% for all years. The income tax expense is a. 240,000 b. 320,000 c. 360,000 d. 400,000 The deferred tax asset to be recognized is a. 240,000 current b. 240,000 noncurrent c. 800,000 current d. 800,000 noncurrent The deferred tax liability - current to be recognized is a. 240,000 b. 480,000 c. 320,000 d. 640,000
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The following information is taken from Brilliant Company’s 2020 financial records: Pretax accounting income- P1,500,000 Accrued warranty in excess of actual warranty expenditures- P24,500 Excess tax depreciation- P45,000 Taxable income- P1,479,500 The temporary differences were created entirely in 2020. The future deductible amount is expected to reverse in 2021 and the future taxable amount will reverse in equal amounts in the next three years. Tax rates are: 30% in 2020; 32% in 2021; 34% in 2022 and 35% in 2023. 1. How much should Brilliant Company report as deferred tax asset and deferred tax liability, respectively, at December 31, 2020? a. P7,350 and P14,400 b. P7,840 and P15,150 c. P7,840 and P14,400 d. P7,350 and P15,150
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