The following accounts are extracted from the worksheet of X Company onDecember 31, 2020:Income frem eentinuing operations after taxes: $2,000,000• During the year, the company suffered from abnonmal and infrequenthurricane damages that had resulted in a $60,000 pretax lossDuring the yeaI also, the company stopped the activities of its REWsegment which had resulted in a pretax operating loss of S100,000 anda net of tax loss on di sposal $20,000Tax Rate was 30% Based on the data above, the net extraordinary loss was:$60,000O $42,000$18,000None of the above

Answer) Calculation of Net Extraordinary Loss Net Extraordinary Loss = Loss Due to Hurricane – Tax…

The following accounts are extracted from the worksheet of X Company on December 31, 2020: Income frem eontinuing operati ons after taxes: $2,000,000 • During the year, the company suffered from abnormal and infrequent hurricane damages that had resulted in a $60.000 pretax loss • During the year also, the company stopped the activities of its REW segment which had resulted in a pretax operating loss of $100,000 and a net of tax loss on di sposal $20,000 Tax Rate was 30%

The following accounts are extracted from the worksheet of X Company on December 31, 2020: Income frem eontinuing operati ons after taxes: $2,000,000 • During the year, the company suffered from abnormal and infrequent hurricane damages that had resulted in a $60.000 pretax loss • During the year also, the company stopped the activities of its REW segment which had resulted in a pretax operating loss of $100,000 and a net of tax loss on di sposal $20,000 Tax Rate was 30%

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter7: Losses—deductions And Limitations

Section: Chapter Questions

Problem 17P

See similar textbooks

Similar questions

Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and taxable income for 2020. The prior period adjustment was the result of an error in calculating bad debt expense for 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. When the company applies intraperiod income tax allocation, the prior period adjustment will be shown on the: a. income statement at 12,000 b. income statement at 8,400 (net of 3,600 income taxes) c. retained earnings statement at 12,000 d. retained earnings statement at 8,400 (net of 3,600 income taxes)
Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800
The following accounts are extracted from the worksheet of X Company on December 31, 2020: Income from continuing operati ons after taxes: $2,000,000 • During the year, the company suffered from abnormal and infrequent hurricane damages that had resulted in a $60,000 pretax loss During the year also, the company stopped the activities of its REW segment which had resulted in a pretax operating loss of $100,000 and a net of tax loss on di sposal $20.000 Tax Rate was 30% Based on the data above, discontinued operations will have the following effect in the income statement: Decrease by $90,000 Decrease by $120.000 Decrease by $84,000 None of the above
What is the corrected 2019 Net Income? * Bee Company's net income for 2018, 2019, and 2020 were P100,000; P145,000; and P185,000 respectively. The following items were not properly handled: a. Rent of P6,500 for 2021 was received from a lessee on December 31, 2020, and was recorded as outright income in 2020. b. Salaries payable at the end of the following years were omitted: December 31, 2017 2,500 December 31, 2018 5,500 December 31, 2019 7,500 December 31, 2020 4,700 c+ The following unused office supplies were omitted in the accounting records: December 31, 2017 3,500 6,500 December 31, 2018 December 31, 2019 December 31, 2020 3,700 7,100 O 123,700 O 140,200 146,700 159,300 O none of the them
On December 31, 2020, Fang Corp. is in financial difficulty and cannot pay a $ 910,000 note with $ 91,000 accrued interest payable to AJ Ltd., which is now due. AJ agrees to accept from Fang an equipment that has a fair value of $ 445,000, an original cost of $ 720,000, and accumulated depreciation of $ 345,000 1. Record the journal entries in Fang corporation's books
At December 31, 2019, Sunland Company had a net deferred tax liability of $361,200. An explanation of the items that compose this balance is as follows. Temporary Differences Resulting Balancesin Deferred Taxes1. Excess of tax depreciation over book depreciation $186,400 2. Accrual, for book purposes, of estimated loss contingency frompending lawsuit that is expected to be settled in 2020. The losswill be deducted on the tax return when paid. (52,000)3. Accrual method used for book purposes and installment methodused for tax purposes for an isolated installment sale of an investment. 226,800 $361,200 In analyzing the temporary differences, you find that $29,100 of the depreciation temporary difference will reverse in 2020, and $127,800 of the temporary difference due to the installment sale will reverse in 2020. The tax rate for all years is 20%. Indicate the manner in which deferred taxes should be presented on Sunland Company’s December 31, 2019, balance sheet.
On June 30, 2021, Coco Inc. incurred a P2,000,000 net loss from disposal of a business segment. Also on the same date, Lakatan Inc. paid P800,000 for property taxes assessed for the calendar year 2021. What total amount should be included in the determination of the net income or loss for the six-month interim period ended June 30, 2021? A. 2,400,000B. 2,000,000C. 1,600,000D. 800,000
On June 30, 2021, Line Company incurred a P100,000 net loss from disposal of a business segment. Also, on June 30, 2021, the entity paid P40,000 for property taxes assessed for 2021. What amount should be included in the determination of net income or loss for the six-month interim period ended June 30, 2021? A. 90,000 B. 100,000 C. 140,000 D. 120,000
In 2019, the Hermes Corporation failed to record $8,000 in depreciation expense. The error was discovered in May of 2020. Required. Make the appropriate joumal entry in the books of Hermes Corporation in the year 2020.
ABC COMPANY Income Statement shows $ 297,500 profit for the year 2019. The following information are provided to arrive the taxable income. The opening inventory is undervalued by $ 7,500. Provision for bad debts of $ 4,000 has not been included to calculate the above profit.The firm did not record $ 5,000 dividend income from equity investment. The depreciation of a permanent building cost $ 200,000 has been calculated at 5%.A vehicle was purchased for $ 10,000 for official use and it is recorded as an expenses. The firm incurred advertisement expenses of $ 27,000. However, the tax authority declared $ 12,000 as non-deductible for this year.Travel expenses was $ 3,800 out of which $ 3,000 is relevant for businessCalculate the taxable profit and the tax liability of the firm for the year 2019-20
Ngata Ltd. insured under a loss of profits policy of Sh.16,000,000. The company’s premises were partly destroyed by fire which took place on 1 May 2018 and the business resumed normal operations on 1 September 2018. Given below is the information extracted from the books of the company relating to the policy: Period of indemnity is six months. Net profit for preceding financial year – Sh.8,800,000. Insured standing charges – Sh.9,600,000. Uninsured standing charges – Sh.1,400,000 Increased cost of working – Sh.5,000,000. Savings in insured standing charges – Sh.800,000. Reduction in turnover avoided through increase in cost of working – Sh.10,000,000 Financial year ends on 31st December. The following are turnovers for four months ended 30 April, 31 August and 31 December respectively. Year Sh. Sh. Sh. Jan-April May- Aug Sept- Dec 2017 2018 22,000,000 24,000,000 50,000,000 25,000,000 48,000,000 31,000,000 10. Owing to reasons acceptable to…
Big Hitter Corp. is facing a class-action lawsuit in theupcoming year. It is possible, but not probable, that thecompany will have to pay a settlement of approximately$2,000,000 in the upcoming year. How would this fact bereported, if at all, in the financial statements prepared atthe end of the current month using GAAP?a. Report $2,000,000 as a current liability.b. Report $2,000,000 as a long-term liability.c. Describe the potential liability in the notes to thefinancial statements.d. Reporting is not required in this case.