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Question;1611. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #13;Gator, Inc., is a domestic corporation with the following balance sheet for;book and tax purposes at the end of the year. Assume a 34% corporate tax rate;and no valuation allowance.;Tax Debit/(Credit);Book Debit/(Credit);Assets;Cash;$ 300;$ 300;Accounts;Receivable;5,000;5,000;Buildings;300,000;300,000;Acc.;Depreciation;(150,000);(80,000);Furniture;Fixtures;40,000;40,000;Acc.;Depreciation;(21,000);(15,000);Total Assets;$174,300;$250,300;Liabilities;Accrued;Litigation Expense;$ ?0?;($ 27,000);Note Payable;(116,000);(116,000);Total;Liabilities;($116,000);($143,000);Stockholder Equity;Paid in;Capital;($ 1,000);($ 1,000);Retained;Earnings;(57,300);(106,300);Total;Liabilities and;Stockholders Equity;($174,300);($250,300);Gator Inc.?s gross deferred tax assets and liabilities at the beginning of;Gator?s year are listed below.;Beginning of Year;Accrued;Litigation Expense;$21,000;Subtotal;$21,000;Applicable;Tax Rate;? 34%;Gross;Deferred Tax Asset;$;7,140;Building ?;Acc. Depreciation;($61,000);Furniture;fixtures ? Acc. Depreciation;(3,200);Subtotal;($64,200);Applicable;tax rate;? 34%;Gross;deferred tax liability;($21,828);Gator Inc.?s book income before tax is $6,300. Gator records two permanent;book-tax differences. It earned $250 in tax exempt municipal bond interest and;$460 in nondeductible meals and entertainment expense. Provide the income tax;footnote rate reconciliation for Gator.;1612. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #14;Amelia, Inc., is a domestic corporation with the following balance sheet for;book and tax purposes at the end of the year. Assume a 34% corporate tax rate;and no valuation allowance.;Tax Debit/(Credit);Book Debit/(Credit);Assets;Cash;$ 1,200;$ 1,200;Accounts;Receivable;20,000;20,000;Buildings;1,200,000;1,200,000;Acc.;Depreciation;(600,000);(320,000);Furniture;Fixtures;160,000;160,000;Acc.;Depreciation;(84,000);(60,000);Total Assets;$;697,200;$1,001,200;Liabilities;Accrued;Vacation Pay;$ ?0?;($108,000);Note Payable;(464,000);(464,000);Total;Liabilities;($464,000);($572,000);Stockholder Equity;Paid in;Capital;($ 4,000);($ 4,000);Retained;Earnings;(229,200);(425,200);Total;Liabilities and;Stockholders Equity;($697,200);($1,001,200);Amelia Inc.?s gross deferred tax assets and liabilities at the beginning of;Amelia?s year are listed below.;Beginning of Year;Accrued;Vacation Pay;$84,000;Subtotal;$84,000;Applicable;Tax Rate;? 34%;Gross;Deferred Tax Asset;$28,560;Building ?;Acc. Depreciation;($244,000);Furniture;fixtures ? Acc. Depreciation;(12,800);Subtotal;($256,800);Applicable;tax rate;? 34%;Gross;deferred tax liability;($;87,312);Amelia Inc.?s book income before tax is $25,200. Amelia records two permanent;book-tax differences. It earned $1,000 in tax exempt municipal bond interest;and $1,840 in nondeductible meals and entertainment expense. Determine the;change in Amelia?s deferred tax assets for the current year.;1613. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #15;Amelia, Inc., is a domestic corporation with the following balance sheet for;book and tax purposes at the end of the year. Assume a 34% corporate tax rate;and no valuation allowance.;Tax Debit/(Credit);Book Debit/(Credit);Assets;Cash;$ 1,200;$ 1,200;Accounts;Receivable;20,000;20,000;Buildings;1,200,000;1,200,000;Acc.;Depreciation;(600,000);(320,000);Furniture;Fixtures;160,000;160,000;Acc. Depreciation;(84,000);(60,000);Total Assets;$;697,200;$1,001,200;Liabilities;Accrued;Vacation Pay;$ ?0?;($108,000);Note Payable;(464,000);(464,000);Total;Liabilities;($464,000);($572,000);Stockholder Equity;Paid in;Capital;($ 4,000);($ 4,000);Retained;Earnings;(229,200);(425,200);Total;Liabilities and;Stockholders Equity;($697,200);($1,001,200);Amelia Inc.?s gross deferred tax assets and liabilities at the beginning of;Amelia?s year are listed below.;Beginning of Year;Accrued;Vacation Pay;$84,000;Subtotal;$84,000;Applicable;Tax Rate;? 34%;Gross;Deferred Tax Asset;$28,560;Building ?;Acc. Depreciation;($244,000);Furniture;fixtures ? Acc. Depreciation;(12,800);Subtotal;($256,800);Applicable;tax rate;? 34%;Gross;deferred tax liability;($;87,312);Amelia Inc.?s book income before tax is $25,200. Amelia records two permanent;book-tax differences. It earned $1,000 in tax exempt municipal bond interest;and $1,840 in nondeductible meals and entertainment expense. Determine the net;deferred tax asset or net deferred tax liability at year end.;1614. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #16;Amelia, Inc., is a domestic corporation with the following balance sheet for;book and tax purposes at the end of the year. Assume a 34% corporate tax rate;and no valuation allowance.;Tax Debit/(Credit);Book Debit/(Credit);Assets;Cash;$ 1,200;$ 1,200;Accounts;Receivable;20,000;20,000;Buildings;1,200,000;1,200,000;Acc.;Depreciation;(600,000);(320,000);Furniture;Fixtures;160,000;160,000;Acc.;Depreciation;(84,000);(60,000);Total Assets;$;697,200;$1,001,200;Liabilities;Accrued;Vacation Pay;$ ?0?;($108,000);Note Payable;(464,000);(464,000);Total;Liabilities;($464,000);($572,000);Stockholder Equity;Paid in;Capital;($ 4,000);($ 4,000);Retained;Earnings;(229,200);(425,200);Total;Liabilities and;Stockholders Equity;($697,200);($1,001,200);Amelia Inc.?s gross deferred tax assets and liabilities at the beginning of;Amelia?s year are listed below.;Beginning of Year;Accrued;Vacation Pay;$84,000;Subtotal;$84,000;Applicable;Tax Rate;? 34%;Gross;Deferred Tax Asset;$28,560;Building ?;Acc. Depreciation;($244,000);Furniture;fixtures ? Acc. Depreciation;(12,800);Subtotal;($256,800);Applicable;tax rate;? 34%;Gross;deferred tax liability;($;87,312);Amelia Inc.?s book income before tax is $25,200. Amelia records two permanent;book-tax differences. It earned $1,000 in tax exempt municipal bond interest;and $1,840 in nondeductible meals and entertainment expense. Determine the;change in Amelia?s deferred tax liabilities for the current year.;1615. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #17;Amelia, Inc., is a domestic corporation with the following balance sheet for;book and tax purposes at the end of the year. Assume a 34% corporate tax rate;and no valuation allowance.;Tax Debit/(Credit);Book Debit/(Credit);Assets;Cash;$ 1,200;$ 1,200;Accounts;Receivable;20,000;20,000;Buildings;1,200,000;1,200,000;Acc. Depreciation;(600,000);(320,000);Furniture;Fixtures;160,000;160,000;Acc.;Depreciation;(84,000);(60,000);Total Assets;$;697,200;$1,001,200;Liabilities;Accrued;Vacation Pay;$ ?0?;($108,000);Note Payable;(464,000);(464,000);Total;Liabilities;($464,000);($572,000);Stockholder Equity;Paid in;Capital;($ 4,000);($ 4,000);Retained;Earnings;(229,200);(425,200);Total;Liabilities and;Stockholders Equity;($697,200);($1,001,200);Amelia Inc.?s gross deferred tax assets and liabilities at the beginning of;Amelia?s year are listed below.;Beginning of Year;Accrued;Vacation Pay;$84,000;Subtotal;$84,000;Applicable;Tax Rate;? 34%;Gross;Deferred Tax Asset;$28,560;Building ?;Acc. Depreciation;($244,000);Furniture;fixtures ? Acc. Depreciation;(12,800);Subtotal;($256,800);Applicable;tax rate;? 34%;Gross;deferred tax liability;($;87,312);Amelia Inc.?s book income before tax is $25,200. Amelia records two permanent;book-tax differences. It earned $1,000 in tax exempt municipal bond interest;and $1,840 in nondeductible meals and entertainment expense. Determine Amelia?s;change in net deferred tax asset or net deferred tax liability for the current year;and provide the journal entry to record this amount.;1616. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #18;Amelia, Inc., is a domestic corporation with the following balance sheet for;book and tax purposes at the end of the year. Assume a 34% corporate tax rate;and no valuation allowance.;Tax Debit/(Credit);Book Debit/(Credit);Assets;Cash;$ 1,200;$ 1,200;Accounts;Receivable;20,000;20,000;Buildings;1,200,000;1,200,000;Acc. Depreciation;(600,000);(320,000);Furniture;Fixtures;160,000;160,000;Acc.;Depreciation;(84,000);(60,000);Total Assets;$;697,200;$1,001,200;Liabilities;Accrued;Vacation Pay;$ ?0?;($108,000);Note Payable;(464,000);(464,000);Total;Liabilities;($464,000);($572,000);Stockholder Equity;Paid in;Capital;($ 4,000);($ 4,000);Retained;Earnings;(229,200);(425,200);Total;Liabilities and;Stockholders Equity;($697,200);($1,001,200);Amelia Inc.?s gross deferred tax assets and liabilities at the beginning of;Amelia?s year are listed below.;Beginning of Year;Accrued;Vacation Pay;$84,000;Subtotal;$84,000;Applicable;Tax Rate;? 34%;Gross;Deferred Tax Asset;$28,560;Building ?;Acc. Depreciation;($244,000);Furniture;fixtures ? Acc. Depreciation;(12,800);Subtotal;($256,800);Applicable;tax rate;? 34%;Gross;deferred tax liability;($;87,312);Amelia Inc.?s book income before tax is $25,200. Amelia records two permanent;book-tax differences. It earned $1,000 in tax exempt municipal bond interest;and $1,840 in nondeductible meals and entertainment expense. Calculate Amelia?s;current tax expense.;1617. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #19;Amelia, Inc., is a domestic corporation with the following balance sheet for;book and tax purposes at the end of the year. Assume a 34% corporate tax rate;and no valuation allowance.;Tax Debit/(Credit);Book Debit/(Credit);Assets;Cash;$ 1,200;$ 1,200;Accounts;Receivable;20,000;20,000;Buildings;1,200,000;1,200,000;Acc.;Depreciation;(600,000);(320,000);Furniture;Fixtures;160,000;160,000;Acc.;Depreciation;(84,000);(60,000);Total Assets;$;697,200;$1,001,200;Liabilities;Accrued;Vacation Pay;$ ?0?;($108,000);Note Payable;(464,000);(464,000);Total;Liabilities;($464,000);($572,000);Stockholder Equity;Paid in;Capital;($ 4,000);($ 4,000);Retained;Earnings;(229,200);(425,200);Total;Liabilities and;Stockholders Equity;($697,200);($1,001,200);Amelia Inc.?s gross deferred tax assets and liabilities at the beginning of;Amelia?s year are listed below.;Beginning of Year;Accrued;Vacation Pay;$84,000;Subtotal;$84,000;Applicable;Tax Rate;? 34%;Gross;Deferred Tax Asset;$28,560;Building ?;Acc. Depreciation;($244,000);Furniture;fixtures ? Acc. Depreciation;(12,800);Subtotal;($256,800);Applicable;tax rate;? 34%;Gross;deferred tax liability;($;87,312);Amelia Inc.?s book income before tax is $25,200. Amelia records two permanent;book-tax differences. It earned $1,000 in tax exempt municipal bond interest;and $1,840 in nondeductible meals and entertainment expense. Provide the;journal entry to record Amelia?s current tax expense.;Correct;Answer;1618. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #20;Amelia, Inc., is a domestic corporation with the following balance sheet for;book and tax purposes at the end of the year. Assume a 34% corporate tax rate;and no valuation allowance.;Tax Debit/(Credit);Book Debit/(Credit);Assets;Cash;$ 1,200;$ 1,200;Accounts;Receivable;20,000;20,000;Buildings;1,200,000;1,200,000;Acc.;Depreciation;(600,000);(320,000);Furniture;Fixtures;160,000;160,000;Acc.;Depreciation;(84,000);(60,000);Total Assets;$;697,200;$1,001,200;Liabilities;Accrued;Vacation Pay;$ ?0?;($108,000);Note Payable;(464,000);(464,000);Total;Liabilities;($464,000);($572,000);Stockholder Equity;Paid in;Capital;($ 4,000);($ 4,000);Retained;Earnings;(229,200);(425,200);Total;Liabilities and;Stockholders Equity;($697,200);($1,001,200);Amelia Inc.?s gross deferred tax assets and liabilities at the beginning of;Amelia?s year are listed below.;Beginning of Year;Accrued;Vacation Pay;$84,000;Subtotal;$84,000;Applicable;Tax Rate;? 34%;Gross;Deferred Tax Asset;$28,560;Building ?;Acc. Depreciation;($244,000);Furniture;fixtures ? Acc. Depreciation;(12,800);Subtotal;($256,800);Applicable;tax rate;? 34%;Gross;deferred tax liability;($;87,312);Amelia Inc.?s book income before tax is $25,200. Amelia records two permanent;book-tax differences. It earned $1,000 in tax exempt municipal bond interest;and $1,840 in nondeductible meals and entertainment expense. What is Amelia?s;total provision for income tax expense reported on its financial statement and;its book net income after tax?;1619. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #21;Amelia, Inc., is a domestic corporation with the following balance sheet for;book and tax purposes at the end of the year. Assume a 34% corporate tax rate;and no valuation allowance.;Tax Debit/(Credit);Book Debit/(Credit);Assets;Cash;$ 1,200;$ 1,200;Accounts;Receivable;20,000;20,000;Buildings;1,200,000;1,200,000;Acc.;Depreciation;(600,000);(320,000);Furniture;Fixtures;160,000;160,000;Acc.;Depreciation;(84,000);(60,000);Total Assets;$;697,200;$1,001,200;Liabilities;Accrued;Vacation Pay;$ ?0?;($108,000);Note Payable;(464,000);(464,000);Total;Liabilities;($464,000);($572,000);Stockholder Equity;Paid in;Capital;($ 4,000);($ 4,000);Retained;Earnings;(229,200);(425,200);Total;Liabilities and;Stockholders Equity;($697,200);($1,001,200);Amelia Inc.?s gross deferred tax assets and liabilities at the beginning of;Amelia?s year are listed below.;Beginning of Year;Accrued;Vacation Pay;$84,000;Subtotal;$84,000;Applicable;Tax Rate;? 34%;Gross;Deferred Tax Asset;$28,560;Building ?;Acc. Depreciation;($244,000);Furniture;fixtures ? Acc. Depreciation;(12,800);Subtotal;($256,800);Applicable;tax rate;? 34%;Gross;deferred tax liability;($;87,312);Amelia Inc.?s book income before tax is $25,200. Amelia records two permanent;book-tax differences. It earned $1,000 in tax exempt municipal bond interest;and $1,840 in nondeductible meals and entertainment expense. Provide the income;tax footnote rate reconciliation for Amelia.;1620. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #22;At the beginning of the year, Jensen Inc., holds a net operating loss;carryforward, and its balance sheet shows a related deferred tax asset of;$500,000. At the end of the year, the balance in the deferred tax asset account;has not changed, but Jensen?s auditors want to record a $100,000 valuation;allowance against this amount, because of a persistent downturn in Jensen?s;profitability. Develop the journal entry to record the valuation allowance.;1621. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #23;At the beginning of the year, the balance sheet of Jensen Inc., shows a;$500,000 deferred tax asset relating to a net operating loss carryforward;offset by a $100,000 valuation allowance. At the end of the year, Jensen?s;auditors agree to release $40,000 of the allowance. Develop the journal entry;to record this change in the valuation allowance.;1622. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #24;After applying the balance sheet method to determine the GAAP income tax;expense of Cutter Inc., the following account balances are found. Determine the;balance sheet presentation of these amounts. Hint: Which of the accounts should you combine for the final;balance sheet disclosure?;Deferred tax;assets, current;$100,000;Deferred tax;liabilities, current;115,000;Deferred tax;assets, noncurrent;80,000;Deferred tax;liabilities, noncurrent;30,000;1623. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #25;After applying the balance sheet method to determine the GAAP income tax;expense of Poppert Inc., the following account balances are found. Determine;the balance sheet presentation of these amounts. Hint: Which of the accounts should you combine for the final;balance sheet disclosure?;Deferred tax;assets, current;$200,000;Deferred tax;assets, noncurrent;145,000;Deferred tax;liabilities, current;80,000;Deferred tax;liabilities, noncurrent;230,000;1624. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question PR #26;You are assisting LipidCo, a U.S. corporation subject to GAAP, to determine its;current-year book expense for income taxes. The following represent the steps;that you will take in making this computation. Put the steps into the correct;order.;A.;Compute the;deferred tax provision.;B.;Decide;whether a valuation allowance is required, and apply or release it.;C.;Determine;book income before tax effects.;D.;Determine;the current tax provision.;E.;Identify and;measure temporary book-tax differences.;F.;Prepare the;disclosures for the financial statement footnotes.;G.;Subtract;permanent book-tax difference.;1625. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question ES #1;A corporation?s taxable income almost never is the same as its GAAP financial;accounting income. Explain why this occurs. Use the terms permanentand temporary;book-tax differences in your answer. Give examples of each.;1626. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question ES #2;Book-tax differences can be explained in part by examining the objectives;underlying financial accounting and taxable income computations. Evaluate this;statement..;1627. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question ES #3;How does an auditor determine whether a valuation allowance is needed against;an entity?s deferred tax asset? List some of the factors than an auditor will;consider in this regard.;1628. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question ES #4;Grant, a multinational corporation based in the U.S., has used ASC 740-30 (APB;23) to avoid reporting any U.S. deferred tax expense on $70 million of the;earnings of its foreign subsidiaries. All of these subsidiaries operate in;countries with lower tax rates than those of the U.S. When the profits;eventually are repatriated, how is Grant?s effective tax rate affected on its GAAP;financial statements?;1629. CHAPTER;14?TAXES ON THE FINANCIAL STATEMENTS Question ES #5;You are the tax adviser to a publicly traded U.S. corporation. How might you;use a ?benchmarking? analysis to begin your review of the entity?s tax;situation and planning opportunities?

 

Paper#59282 | Written in 18-Jul-2015

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