Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Question
Chapter 12, Problem 12.4P
To determine
Non-Ordinary Items
They are those items that consist of gains and losses on the company’s income statement which are unusual and infrequent in nature.
The tax expense or benefit to the two non-ordinary items.
Expert Solution & Answer
Answer to Problem 12.4P
Net Tax expenses for value E is
Explanation of Solution
| Particulars | Amount in $ |
| YTD income (loss) | |
| Projected income (loss) | |
| Total annual income (loss) | |
| Carry forward of 2013 loss | |
| Estimated annual taxable income | |
| Estimated tax: | |
| On first | |
| On next | |
| On next | |
| Remaining income | - |
| Less: Tax credit | |
| Net tax | |
| Effective Rate | |
| Tax expense |
Calculation of tax expense:
Effective interest rate
Calculation of tax expense :
Tax expense =Quarter 1 -restated continuing income × effective tax rate
Item C
Tax expense originally reported for quarter 1
| Particulars | Amount in $ |
| Tax expense (benefit) traceable to restated: | |
| Continuing operations | |
| Discontinued operations | |
| Tax expense originally reported for quarter 1 |
Item D
Tax expense for quarter 2 income from continuing operations:
| Particulars | Amount in $ |
| Quarter 1 — restated income (loss) | |
| Quarter 2 — income (loss) | |
| YTD income (loss) | |
| Projected income (loss) | |
| Total annual income (loss) | |
| Carry forward of 2013 loss | |
| Estimated annual taxable income | |
| Estimated tax: | |
| On first | |
| On next | |
| On next | |
| Remaining income | - |
| Less: Tax credit | |
| Net tax | |
| Effective tax rate | |
| Tax expense |
Calculation of effective tax rate:
Effective interest rate
Calculation of tax expense:
Tax expense
= Quarter l -restated continuing income x Effective tax rate
Item E
| Particulars | Amount in $ |
| Quarter 1 - restated | |
| Quarter 2: | |
| Operating loss | |
| Realized loss on disposal | |
| Impairment loss | |
| Value of E |
ITEM F
| Particulars | Ordinary income | Total income | Total excluding Non- ordinary loss | Total excluding Non-ordinary gain | |
| Pretax income (loss): | |||||
| Continuing | |||||
| Discontinued | _ | - | |||
| Extraordinary | _ | - | |||
| Pretax income | |||||
| (loss) | |||||
| Tax expense | |||||
| (benefit) | |||||
| Taxable income: | |||||
| Pretax income | |||||
| (loss) 2013 loss | |||||
| Taxable income | |||||
| Estimated tax: On first On next On next Remaining income Less: Tax credit | |||||
| - | |||||
| Net tax | - |
Incremental tax expense (benefit)
| PARTICULARS | AMOUNT IN $ |
| Incremental tax expense (benefit) traceable to: | |
| All non-ordinary items | |
| All non-ordinary losses |
CONCLUSION Net Tax expenses for value E is
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Chapter 12 Solutions
Advanced Accounting
Ch. 12 - Prob. 1UTICh. 12 - Prob. 2UTICh. 12 - Prob. 3UTICh. 12 - Prob. 4UTICh. 12 - Prob. 1.1ECh. 12 - Prob. 1.2ECh. 12 - Prob. 1.3ECh. 12 - Prob. 1.4ECh. 12 - Prob. 1.5ECh. 12 - Prob. 1.6E
Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4.1ECh. 12 - Prob. 4.2ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Ratable allocation for nonordinary items. Baxter...Ch. 12 - Prob. 9.1ECh. 12 - Prob. 9.2ECh. 12 - Prob. 9.3ECh. 12 - Prob. 10ECh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - Prob. 12.6PCh. 12 - Prob. 12.7.1PCh. 12 - Prob. 12.7.2PCh. 12 - Prob. 12.7.3PCh. 12 - Prob. 12.8.1PCh. 12 - Prob. 12.8.2P
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