The chief financial officer of Laurent Ltd has asked you to calculate the taxable income and prepare the journal entry for current tax in each of the following four cases. Case 1 Case 2 Case 3 Case 4 Accounting profit (loss) $8o 00 $40 000 $10 000 S(20 000) Goodwill impairment loss* 12 000 16 000 Entertainment costs* 12 000 14 000 Donation to political party* 2 000 6 000 Depreciation expense - plant S 00 4 000 20 000 4 000 Long-service leave expense 10 000 9 000 10 000 9 000 Tax depreciation for plant 16 000 S 000 40 000 S 000 Long-service leave paid 5 000 12 000 6 000

The chief financial officer of Laurent Ltd has asked you to calculate the taxable income and prepare the journal entry for current tax in each of the following four cases. Case 1 Case 2 Case 3 Case 4 Accounting profit (loss) $8o 00 $40 000 $10 000 S(20 000) Goodwill impairment loss* 12 000 16 000 Entertainment costs* 12 000 14 000 Donation to political party* 2 000 6 000 Depreciation expense - plant S 00 4 000 20 000 4 000 Long-service leave expense 10 000 9 000 10 000 9 000 Tax depreciation for plant 16 000 S 000 40 000 S 000 Long-service leave paid 5 000 12 000 6 000

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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Riverbend Incorporated received a $200,000 dividend from stock it held in Hobble Corporation. Riverbend's taxable income is $2,100,000 before deducting the dividends-received deduction (DRD) and a $100,000 charitable contribution. Use Exhibit 13-7. Note: Round your tax rates to 2 decimal places. Leave no answer blank. Enter zero if applicable. Required: a. What is Riverbend's deductible DRD assuming it owns 10 percent of Hobble Corporation? b. Assming that it owns 10 percent of Hobble Corporation, what is Riverbend's marginal tax rate on the dividend? c. What is Riverbend's DRD assuming it owns 60 percent of Hobble Corporation? d. Assming that it owns 65 percent of Hobble Corporation, what is Riverbend's marginal tax rate on the dividend? e. What is Riverbend's DRD assuming it owns 85 percent of Hobble Corporation (and is part of the same affiliated group)? f. Assming that it owns 85 percent of Hobble Corporation (and is part of the same affiliated group), what is Riverbend's marginal…
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Broncos Co. reports pretax financial income of $70,000 for 20x1. The following items cause taxable income to be different than pretax financial income: Depreciation on the tax return is greater than depreciation on the income statement by $16,000. Rent collected on the tax return is greater than rent earned on the income statement by $22,000. Fines for pollution appear as an expense of $11,000 on the income statement. Interest income from City of Denver municipal bonds is $5,000.Broncos’ tax rate is 30% for all years and the company expects to report taxable income in all future years.a) Compute taxable income.b) Prepare the journal entry to record income tax expense, deferred income tax, and income tax payable for 20x1.c) Compute net income for 20x1.
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