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- Flint Enterprises Ltd., a private company following ASPE earned accounting income before taxes of $1,712,000 for the year ended December 31, 2020. During 2020, Flint paid $240,000 for meals and entertainment expenses. In 2017, Flint’s tax accountant made a mistake when preparing the company’s income tax return. In 2020, Flint paid $17,000 in penalties related to this error. These penalties were not deductible for tax purposes. Flint owned a warehouse building for which it had no current use, so the company chose to use the building as a rental property. At the beginning of 2020, Flint rented the building to SPK Inc. for two years at $260,000 per year. SPK paid the entire two years’ rent in advance. Flint used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $396,000. For tax purposes, Flint claimed the maximum capital cost allowance of $621,000. Flint began to sell its products with a two-year warranty against manufacturing…Sunland Services Ltd. follows ASPE and had earned accounting income before taxes of $520,000 for the year ended December 31, 2023. During 2023, Sunland paid $77,000 for meals and entertainment expenses. In 2020, Sunland's tax accountant made a mistake when preparing the company's income tax return. In 2023, Sunland paid $10,500 in penalties related to this error. These penalties were not deductible for tax purposes. Sunland owned a warehouse building for which it had no current use, so the company chose to use the building as a rental property. At the beginning of 2023, Sunland rented the building to Trung Inc. for two years at $64,500 per year. Trung paid the entire two years' rent in advance. Sunland used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $286,200. For tax purposes, Sunland claimed the maximum capital cost allowance of $431,400. This asset had been purchased at the beginning of the year for $3,004,400. In 2023, Sunland…Sunland Services Ltd. follows ASPE and had earned accounting income before taxes of $520,000 for the year ended December 31, 2023. During 2023, Sunland paid $77,000 for meals and entertainment expenses. In 2020, Sunland's tax accountant made a mistake when preparing the company's income tax return. In 2023, Sunland paid $10,500 in penalties related to this error. These penalties were not deductible for tax purposes. Sunland owned a warehouse building for which it had no current use, so the company chose to use the building as a rental property. At the beginning of 2023, Sunland rented the building to Trung Inc. for two years at $64,500 per year. Trung paid the entire two years' rent in advance. Sunland used the straight-line depreciation method for accounting purposes and recorded depreciation expense of $286,200. For tax purposes, Sunland claimed the maximum capital cost allowance of $431,400. This asset had been purchased at the beginning of the year for $3,004,400. In 2023, Sunland…
- Rich Goma Corporation failed to file its income tax return for the fiscal year ending August 31, 2021. On June 6, 2022, it filed an income tax return with a basic tax still due and payable for the fiscal year amounting to P500,000. Compute the interest penalty to be imposed by the BIR. P28,603 P45,873 P28,438 P46,207Mini, Inc., earns pretax book net income of $1,828,000 in 2018. Mini deducted $190,400 in bad debt expense for book purposes. This expense is not yet deductible for tax purposes.Mini reports $1,919,400 of pretax book net income in 2019. Mini did not deduct any bad debt expense for book purposes in 2019 but did deduct $142,800 in bad debt expense for tax purposes. Mini reports no other temporary or permanent differences. Assuming that the pertinent U.S. Federal corporate income tax rate is 21%, and Mini earns an after-tax rate of return on capital of 8%. a. The 2019 end-of-year balance in Mini’s deferred tax asset and deferred tax liability balance sheet accounts. If an amount is zero, enter "0". If required, round your answer to nearest whole value. 2019 a. Deferred tax asset account balance ______ b. Deferred tax liability account balance ______ b. The cost to Mini of the deferral of the bad debt deduction, considering the time value of money. Mini earns an…Hillcrest Limited used the standard option to calculate provisional tax the 2018 tax year. The RIT for the 2017 tax year was $120,000. The company paid all instalments on time. When the company’s accountant filed the company's 2018 tax return on 7 July 2018, he calculated RIT of $192,000. The accountant got the balance from the myIR secure online services account on 9 September 2018 and paid the end-of-year tax and interest right away. IRD charged the interest at a rate of 9.21% to 7 May 2018 and then 8.27% as late payment after 7 May 2018. Calculate the 2018 provisional tax and the instalments on the instalment dates and the payment or refund on 9 September 2018.
- In September of 2021, Calhoun Financial Services became involved in a tax dispute with the IRS. On December 31, 2021, the tax attorney for Calhoun indicated that an unfavorable outcome to the dispute was probable. At that time, the additional taxes were estimated to be $570,000 but could be as high as $770,000. After the year-end, but before the 2021 financial statements were issued, Calhoun revised its tax liability estimate to $650,000. Calhoun should have accrued a related liability on its December 31, 2021 balance sheet that was issued on March 4, 2022: A) $0. B $570,000. $770,000. $650,000.The company incurred $800 of income tax but has made no tax payments this year. Record the transaction.During 2005, Tedd Co. became involved in a tax dispute with the IRS. At December 31, 2005, Tedd's tax advisor believed that an unfavorable outcome was probable. A reasonable estimate of additional taxes was $400,000 but could be as much as $600,000.After the 2005 financial statements were issued, Tedd received and accepted an IRS settlement offer of $450,000.What amount of accrued liability should Tedd have reported in its December 31, 2005 balance sheet?
- Bridgeton Company started its operations at the beginning of 2018. The following information relates to its operations for the year. The differences between the 2018 income statement and tax return are listed below: 1. Fines incurred for pollution violations of $7,320 were deducted in computing pretax financial income.2. Warranty expense accrued for financial reporting purposes amounts to $15,910.Warranty deductions per the tax return amount to $8,730.3. Interest revenue earned on an investment in tax-exempt bonds amounts to $2,570.4. Depreciation of property, plant and equipment for financial reporting purposes amounts to $80,500. Depreciation of these assets amounts to $102,000 for the tax return.5. Income on construction contracts using the percentage of completion method per books amounts to $99,000. Income on contracts for tax purposes amounts to $64,300.6. Sales on an accrual basis were $76,890. For tax purposes $60,450 was recorded on the installment sales method.7. Interest…Target Co is a large transport company. In the previous financial year, it billed one of its customers $ 1,500 for services that it had provided. Target Co has recently discovered that the client is experiencing financial distress and will not be able to pay its bill. What action should Target Co take from a tax perspective? (Maximum 250 words)Chanon, Inc. is a supplier of office equipments to the government. The company has recently delivered P2,000,000 worth of equipments but remains unpaid as of date. Yesterday, the company received a Final Assessment Notice from the Bureau of Internal Revenue for deficiency taxes and penalties amounting to P2,000,000. Can Chanon opt not to pay BIR? a. Yes, as the receivable and the tax liability can be set-off as the other party is also the government. b. No, as Chanon can still avail of its judicial remedies. c. Yes, as the claim against the government arose first. d. No, as Chanon's claim is a debt and the government's claim is taxes. These cannot be set-off.