Beaver Dam Inc. (BDI) listed the following items to prepare a reconciliation between book and taxable income. GAAP net income before tax $700,000 Meal and entertainment expense 100,000 GAAP depreciation expense 110,000 Depreciation expense for tax purposes 120,000 a. Compute BDI’s tax expense for financial statement purposes. b. Compute BDI’s tax payable to the IRS.

Beaver Dam Inc. (BDI) listed the following items to prepare a reconciliation between book and taxable income. GAAP net income before tax $700,000 Meal and entertainment expense 100,000 GAAP depreciation expense 110,000 Depreciation expense for tax purposes 120,000 a. Compute BDI’s tax expense for financial statement purposes. b. Compute BDI’s tax payable to the IRS.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Nalad Corp. provided the following data related to accounting and taxable income: Pre-tax accounting income (financial statements) Taxable income (tax return) Income tax rate 20X8 $530,000 20X9 $505,000 305,000 730,000 38% 38% There are no existing temporary differences other than those reflected in these data. There are no permanent differences. Required: 1-a. How much tax expense would be reported in each year if the taxes payable method was used? Tax Expense 20X8 20X9 1-b. What is the implied tax rate? (Round your answers to 1 decimal place.) 20X8 20X9 Implied tax rate 96 % 2-a. How much tax expense would be reported using comprehensive tax allocation (liability method). Tax Expense 20X8 20X9 2-b. How much deferred income tax would be reported using comprehensive tax allocation (liability method).
Subject: accounting
The following information was taken from the accounting records of Lancer Inc, for the year ending 2020. Pretax accounting income $ 1,500,000 Interest Revenue on Municipal bonds 100,000 Litigation expense 2, 000,000 Excess Depreciation for tax purposes 1, 300,000 Deferred revenue 200,000 The tax rate for 2020 is 40% The total taxable income computed by Lancer for 2020 should be : A) $2,300,000 B) $4.900,000 C) $ 900,000 D) $3,700,000
Please put all of the necessary information and computations for better understanding. Thanks ?
Using the following information to respond to the questions below. The corporation tax rate is 21%. Book income M&E disallowance Excess tax depreciation over book depreciation 1. What is taxable income? 2. What is the total tax expense on the financial statement? 3. What is the current tax expense 4. What is the deferred tax expense $100,000 $2,500 $ 4,000
Alvis Corporation reports pretax accounting income of $400,000, but due to a single temporary difference, taxable income is only $250,000. At the beginning of the year, no temporary differences existed. Required: 1. Assuming a tax rate of 35%, what will be Alvis’s net income? 2. What will Alvis report in the balance sheet pertaining to income taxes?
Big Blue Inc. (BBI) listed the following items to prepare a reconciliation between book and taxable income. GAAP net income before tax $ 700,000Entertainment expense 100,000GAAP depreciation expense 90,000Depreciation expense for tax purposes 120,000 a. Compute BBI's tax expense for financial statement purposes.b. Compute BBI's tax payable to the IRS.c. Compute the net increase in BBI's deferred tax assets or deferred tax liabilities for the year.d. Record the journal entry to record taxes for the year.
4. For the year ended December 31, 20x1, Tyre Co. reported pretax financial statement income of P750,000. Its taxable income was P650,000. The difference is due to accelerated depreciation for income tax purposes. Tyre’s effective income tax rate is 30%, and Tyre made estimated tax payments during 20x1 of P90,000. What amount should Tyre report as current tax expense for 20x1?
Crystal Critters, Inc., a U.S. GAAP reporter, has the deferred tax assets and liabilities presented below: Item Classification on the Balance Sheet of Related Account Deferred Tax Associated with Item Excess of warranty expense over warranty deductions Current $74,000 Asset Accelerated depreciation for tax purposes Noncurrent $84,000 Liability Installment sales receivable Current $44,000 Liability Contingent liability Current $34,000 Asset Assuming it meets the conditions to net assets and liabilities, how will the company report deferred taxes on the balance sheet? Group of answer choices current asset: deferred tax asset $108,000; noncurrent liability: deferred tax liability $128,000 noncurrent liability: deferred tax liability $20,000 current liability: deferred tax liability $64,000; noncurrent liability: deferred tax liability $84,000 current liability: deferred tax liability $44,000; noncurrent asset: deferred tax asset $84,000
On its year 1 financial statements, Seatax Corporation, an accrual-method taxpayer, reported federal income tax expense of $570,000. On its year 1 tax return, it reported a tax liability of $650,000. During year 1, Seatax made estimated tax payments of $700,000. What book-tax difference, if any, associated with its federal income tax expense should Seatax have reported when computing its year 1 taxable income? Is the difference favorable or unfavorable? Is it temporary or permanent? Year 1 Book-tax Difference Favorable or Unfavorable Temporary or Permanent
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For the year ended December 31, 2019, Nelson Co.’s income statement showed income of $425,000 before income tax expense. To compute taxable income, the following differences were noted: Income from tax-exempt municipal bonds $60,000 Depreciation deducted for tax purposes in excess of depreciation recorded on the books 130,000 Proceeds received from life insurance on death of an insured employee 100,000 Corporate tax rate for 2019 30% Enacted tax rate for future periods 35% Required: 1. Calculate taxable income and tax payable for tax purposes. 2. Prepare Nelson’s income tax journal entry at the end of 2019.