The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars): Pretax accounting income: $ 195 Pretax accounting income included: Overweight fines (not deductible for tax purposes) 5 Depreciation expense 70 Depreciation in the tax return 110 The applicable tax rate is 25 %. There are no other temp or perm differences. Franklin Freightways should have recorded ($ in millions) A: Tax payable of $48.75. B:Tax payable of $22.5. C:Tax benefit of $10 due to the NOL. D: Tax payable of $40.
The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars): Pretax accounting income: $ 195 Pretax accounting income included: Overweight fines (not deductible for tax purposes) 5 Depreciation expense 70 Depreciation in the tax return 110 The applicable tax rate is 25 %. There are no other temp or perm differences. Franklin Freightways should have recorded ($ in millions) A: Tax payable of $48.75. B:Tax payable of $22.5. C:Tax benefit of $10 due to the NOL. D: Tax payable of $40.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following information relates to Franklin Freightways for its first year of operations (data in
millions of dollars): Pretax accounting income: $ 195 Pretax accounting income included:
Overweight fines (not deductible for tax purposes) 5 Depreciation expense 70 Depreciation in the
tax return 110 The applicable tax rate is 25 %. There are no other temp or perm differences.
Franklin Freightways should have recorded ($ in millions) A: Tax payable of $48.75. B:Tax payable
of $22.5. C:Tax benefit of $10 due to the NOL. D: Tax payable of $40.
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