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If an amount is zero, enter "0". If required, round your answers to the nearest dollar. a. Total tax benefit or expense b. Deferred tax benefit or expense 2023 0 X 166,500 X 3,150 ✔ c. In net present value terms, what has been the cost to Mini of the deferred tax deduction for bad debts? The present value factor at 8% is 0.9615.

If an amount is zero, enter "0". If required, round your answers to the nearest dollar. a. Total tax benefit or expense b. Deferred tax benefit or expense 2023 0 X 166,500 X 3,150 ✔ c. In net present value terms, what has been the cost to Mini of the deferred tax deduction for bad debts? The present value factor at 8% is 0.9615.

FINANCIAL ACCOUNTING
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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Exercise 24-21 (LO. 1, 4) Mini, Inc., earns pretax book net income of $750,000 in 2022, its first year of operations. Mini recognized $20,000 in bad debt expense for book purposes. This expense is not yet deductible for tax purposes. Mini reports $800,000 of pretax book net income in 2023. Mini did not recognize any bad debt expense for book purposes in 2023 but did deduct $15,000 in bad debt expense for tax purposes. Mini reports no other temporary or permanent book-tax differences. The applicable U.S. Federal corporate income tax rate is 21%, and Mini earns an after-tax rate of return on capital of 4%. Enter below the 2023 end-of-year balance in Mini's deferred tax asset or liability at the end of 2023 and its deferred tax benefit or expense and total tax benefit or expense for the year. If an amount is zero, enter "0". If required, round your answers to the nearest dollar. a. Total tax benefit or expense b. Deferred tax benefit or expense $ 0 X $ 2023 166,500 X 3,150 ✔ c. In net present value terms, what has been the cost to Mini of the deferred tax deduction for bad debts? The present value factor at 8% is 0.9615.
Transcribed Image Text:Exercise 24-21 (LO. 1, 4) Mini, Inc., earns pretax book net income of $750,000 in 2022, its first year of operations. Mini recognized $20,000 in bad debt expense for book purposes. This expense is not yet deductible for tax purposes. Mini reports $800,000 of pretax book net income in 2023. Mini did not recognize any bad debt expense for book purposes in 2023 but did deduct $15,000 in bad debt expense for tax purposes. Mini reports no other temporary or permanent book-tax differences. The applicable U.S. Federal corporate income tax rate is 21%, and Mini earns an after-tax rate of return on capital of 4%. Enter below the 2023 end-of-year balance in Mini's deferred tax asset or liability at the end of 2023 and its deferred tax benefit or expense and total tax benefit or expense for the year. If an amount is zero, enter "0". If required, round your answers to the nearest dollar. a. Total tax benefit or expense b. Deferred tax benefit or expense $ 0 X $ 2023 166,500 X 3,150 ✔ c. In net present value terms, what has been the cost to Mini of the deferred tax deduction for bad debts? The present value factor at 8% is 0.9615.
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