Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $840,000 and with anexpected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% inthose years. Pretax accounting income the first year the equipment was used was $960,000, which includes interest revenue of$28,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income andtaxable income. The enacted tax rate is 25%.Prepare the journal entry to record income taxes.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.View transaction listJournal entry worksheet1Record the income tax expense.Note: Enter debits before credits.TransactionGeneral JournalDebitCredit1Income tax expenseDeferred tax liabilityIncome tax payable

TransactionGeneral JournalDebitCredit1Income tax expense$233,000 Income tax payable $201,500…

Answered: Shannon Polymers uses straight-line…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges

Section: Chapter Questions

Problem 1BD

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Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $720,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $820,000, which includes interest revenue of $22,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $880,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $1,000,000, which includes interest revenue of $30,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Transaction General Journal 1 1 Income tax expense Deferred tax liability Income tax payable Debit Credit 33,000
Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $780,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $880,000, which includes interest revenue of $25,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes.
Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $540,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $640,000, which includes interest revenue of $12,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%.
es Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $680,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20 %, and 10% in those years. Pretax accounting income the first year the equipment was used was $780,000, which includes interest revenue of $19,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $800,000 and with an expected useful life of four years and no residual value. For tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $900,000, which includes interest revenue of $20,000 from municipal bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 40%. Prepare the journal entry to record income taxes.
A piece of equipment purchased at a cost $250,000 generated new income of $80,000 per year, witha annual operating costs of $10,000. The equipment was depreciated using MACRS method as 7-year property. At the end of five years, the management decided to sell the equipment for a modest price of $75,000. The company pays taxes at an effective tax rate of 23%. Which of the following was closest to the amount of taxes the company paid in year 5? $15,000 $8,000 $33,000 $11,000
Northwestern Export Services purchased some computers for $80,000 in Year 1. The equipment is depreciated for financial reporting purposes over 5 years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 20%. Amounts for pretax GAAP accounting income, depreciation, and taxable income in Year 1, Year 2, Year 3, Year 4, and Year 5 are as follows: $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Pretax accounting income $240 $195 $210 $285 $320 Depreciation on income statement 16 16 16 16 16 Depreciation on tax return (27) (35) (12) (6) 0 Taxable income $229 $176 $214 $295 $336 a) What type of book-tax difference is this? b) Prepare the appropriate journal entry related to the tax deferral ONLY at December 31, Year 1. (Note: The purchase of computers has already been recorded in Year 1.)Note: Round answers ($ in thousands) to the nearest whole number, if applicable. ($ in thousands)…
Infinity Production acquired a new machine at the beginning of the current year. The machine cost $900,000 with no residual value expected. Infinity uses the straight-line method for financial reporting, assuming a 6-year useful life. The firm classifies the equipment as 5-year MACRS property for tax purposes using the following percentages. Year MACRS (%) 1 20.00% 2 32.00 3 19.20 4 11.52 5 11.52 6 5.76 The company is subject to a 25% income tax rate and has no other book-tax differences. Income before depreciation and tax is presented below: Year Income before Tax and Depreciation 1 $370,000 2 420,000 3 490,000 4 700,000 5 820,000 6 950,000 What is Infinity's income tax expense for year 1?
Infinity Production acquired a new machine at the beginning of the current year. The machine cost $900,000 with no residual value expected. Infinity uses the straight-line method for financial reporting, assuming a 6-year useful life. The firm classifies the equipment as 5-year MACRS property for tax purposes using the following percentages. Year MACRS (%) 1 20.00% 2 32.00 3 19.20 4 11.52 5 11.52 6 5.76 The company is subject to a 20% income tax rate and has no other book-tax differences. Income before depreciation and tax is presented below: Year Income before Tax and Depreciation 1 $450,000 2 500,000 3 570,000 4 700,000 5 820,000 6 950,000 What is Infinity's deferred tax asset or deferred tax liability at the end of year 3? Group of answer choices $38,160 deferred tax liability $2760 deferred tax liability $2760 deferred tax asset $38,160 deferred tax asset PreviousNext
Southern Atlantic Distributors began operations in January 2016 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2016, 30% in 2017, and 20% in 2018. Pretax accounting income for 2016 was $300,000, which includes interest revenue of $40,000 from municipal bonds. The enacted tax rate is 40%. Required: Assuming no differences between accounting income and taxable income other than those described above: 1. Prepare the journal entry to record income taxes in 2016. 2. What is Southern Atlantic’s 2016 net income?
A device has an initial cost of $896,000 and a GDS property life of 7 years. Depreciation of this particular equipment started in year 0, using the MACRS method with the standard half year convention. During year 4, the company received $417,000 in revenue and spent $241,000 in operating expenses. What is the annual cash flow in Year 4, assuming that depreciation is the only book deduction? The income tax rate at this particular operation is 21%.

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