ADVANCED ACCOUNTING
12th Edition
ISBN: 9780357671221
Author: FISCHER
Publisher: CENGAGE L
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Chapter 12, Problem 2E
To determine
Introduction:
Effective tax rate is basically defined as average rate for which individual has to give as tax on the income that they have earned.
To calculate: The effective tax rate that would be applied to income in first six months for different strategies.
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es
Tem Technology has a first-quarter operating loss of $100,000 and expects the following
income for the other three quarters:
Second quarter
Third quarter
Fourth quarter
Tem estimated the effective annual tax rate at 40 percent at the end of the first quarter and
changed it to 45 percent at the end of the third quarter. The company has a normal seasonal
pattern of losses in the first quarter and income in the other quarters.
Required:
Prepare a schedule computing the tax obligations or benefits that should be shown on the
interim statements. (Negative amounts should be indicated by a minus sign.)
Period
1
2
$ 80,000
160,000
400,000
Income (Losses) Before
Taxes
Tax (Benefit)
Less
Period Year-to-Date Tax Rate Year-to-Date Previously
provided
3
4
Total $
0
Estimated
Effective
Annual
%
%
%
%
Reported In
Period
$
0
Your company has always depreciated assets using the straight-line method. Your tax accountant has explained that a switch to the double-declining balance method would minimize taxes in the current year, but you are concerned about the impact this change would have on the value of long-term assets on the balance sheet and future tax liabilities.
Respond to the following in a minimum of 175 words:
Assuming your projected sales (and therefore tax bracket) are predicted to increase dramatically over the next 5 years, what should you do?
Wheaton Inc. reported the following results for its first three years of operations:
2019
Income (before income taxes)
$ 40,000
2020
Loss (before income taxes)
(300,000)
2021
Income (before income taxes)
400,000
There were no permanent or reversible differences during these three years. Assume an income tax rate of 30% for 2019 and 2020, and 40% for 2021, and that any tax loss carryforward is more likely than not to be realized. If Wheaton elects to use the carryback provisions, what after tax net income (loss) is reported for 2020?
Select one:
a.
$(300,000).
b.
$(196,000).
c.
$(184,000).
d.
$0.
e.
none of the above.
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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