TGW, a calendar year corporation, reported $4,016,000 net income before tax on its financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • TGW's depreciation expense per books was $457,000, and its MACRS depreciation deduction was $382,400. • TGW capitalized $687,000 indirect expenses to manufactured inventory for book purposes and $820,000 indirect expenses to manufactured inventory for tax purposes. • TGW's cost of manufactured goods sold was $2,566,000 for book purposes and $2,656,000 for tax purposes. • Four years ago, TGW capitalized $2,304,000 goodwill when it purchased a competitor's business. This year, TGW's auditors required the corporation to write the goodwill down to $1,545,000 and record a $759,000 goodwill impairment expense. Required: Compute TGW's taxable income. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.) Amount TGW's net book income before tax Adjustments: Depreciation Indirect inventory costs Cost of goods sold Book goodwill impairment expense Tax amortization of goodwill TGW's taxable income

TGW, a calendar year corporation, reported $4,016,000 net income before tax on its financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • TGW's depreciation expense per books was $457,000, and its MACRS depreciation deduction was $382,400. • TGW capitalized $687,000 indirect expenses to manufactured inventory for book purposes and $820,000 indirect expenses to manufactured inventory for tax purposes. • TGW's cost of manufactured goods sold was $2,566,000 for book purposes and $2,656,000 for tax purposes. • Four years ago, TGW capitalized $2,304,000 goodwill when it purchased a competitor's business. This year, TGW's auditors required the corporation to write the goodwill down to $1,545,000 and record a $759,000 goodwill impairment expense. Required: Compute TGW's taxable income. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign.) Amount TGW's net book income before tax Adjustments: Depreciation Indirect inventory costs Cost of goods sold Book goodwill impairment expense Tax amortization of goodwill TGW's 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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Q.6.
For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 300,000 Permanent difference (15,000 ) 285,000 Temporary difference-depreciation (20,000 ) Taxable income $ 265,000 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as its deferred income tax liability as of the end of its first year of operations?
Accounting During the current year, S Ltd. has net taxable capital gains of $50,000, receives dividends from taxable Canadian corporations of $40,000, and earns interest income of $20,000. Taxable Income for the year equals $260,000, of which $200,000 is eligible for the small business deduction. The Company's additional refundable tax for the year is equal to: $6,402 $10,667 $ 7,040 $ 8,427
TyroneCo, an S corporation with a positive E & P balance, reports gross receipts for the year totaling $533,000 (of which $266,500 is passive investment income). Expenditures directly connected to the production of the passive investment income total $106,600. Compute Tyrone's passive investment income tax. If required, round your final answer to the nearest dollar.
Insure Corporation reported a net operating loss of $25 million for financial reporting and tax purposes. Taxable income last year and the previous year, respectively, was $20 million and $15 million. The enacted tax rate each year is 25%. Assume that Insure qualifies as a type of company that is allowed to carry back an NOL to two prior taxable years, using the earliest year first. Prepare the journal entry to recognize the income tax benefit of the net operating loss.
Ski Company reported pretax financial income of P6,200,000 for the current year. Included in other income was P200,000 interest revenue from government bonds held by the entity. The income statement also included depreciation expense of P500,000 for a machine costing P3,000,000. The income tax return reported P600,000 as depreciation on the machine. What is the amount of income tax due for taxable year 2020?
In 2018 AXA Company faced serious liquidity problems. Management decided to window dress the financial statements in a manner that improved the company's current ratios in order to hide the liquidity problem of the situation. However, in 2019 the company came out of liquidity problem and stopped window dressing practice. - which kind of qualitative characteristics of useful financial information in this case?
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Cadillac Square Corporation determined that $1,128,800 of its research tax credit on its current-year tax return was uncertain, but that it was more likely than not to be sustained on audit. Management made the following assessment of the company's potential tax benefit from the deduction and its probability of occurring. Individual Cumulative Potential Estimated Benefit (000s) $1,128,800 $ 964,500 $ 233,250 0 Probability of Probability of Occurring (%) Occurring (%) 47 30 15 8 Tax benefit amount recognized 47 77 92 100 What amount of the tax benefit related to the uncertain tax position from the research tax credit can Cadillac Square Corporation recognize in calculating its income tax provision in the current year?
Li Corporation reported pretax book income of $605,000. Tax depreciation exceeded book depreciation by $401,000. Li's beginning book (tax) basis in its fixed assets was $1,905,000 ($1,704,000) and its ending book (tax) basis is $1,805,000 ($1,206,000). In addition, the company received $305,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $69,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit. Note: Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit. Deferred income tax expense
Lanco Corporation, an accrual-method corporation, reported taxable income of $1,720,000 this year and paid Federal income tax of $361,200. Included in the computation of taxable income were the following items: • MACRS depreciation of $253,000. Depreciation for earnings and profits purposes is $124,000. • A net capital loss carryover of $13,700 from last year. • A net operating loss carryover of $31,000 from last year. $76,750 capital gain from the distribution of land to the company's sole shareholder (see below). Not included in the computation of taxable income were the following items: • Tax-exempt income of $8,600. • Life insurance proceeds of $267,000. • Excess current-year charitable contribution of $2,300 (to be carried over to next year). • Tax-deferred gain of $21,300 on a like-kind exchange. • Nondeductible life insurance premium of $4,700. • Nondeductible interest expense of $3,600 on a loan used to buy tax-exempt bonds. . Lanco's accumulated E&P at the beginning of the…
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