Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 2, Problem 1DIC
To determine
Identify the reasons behind slightly fall in the value of
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Access the 2016 financial statements and related disclosure notes of Ford Motor Company from its
website at corporate.ford.com. Required: 1. In Note 21, find Ford's net deferred tax asset or liability. What
is that number? 2. Does Ford show a valuation allowance against deferred tax assets? If so, what is the
number, and what is Ford's explanation for it? 3-a. Does Ford have any NOL carryforwards? 3-b. What is
the amount of any carryforward, what deferred tax asset or liability is associated with it? (Round your
answer to 1 decimal place.) 3-c. What effective tax rate does that imply was used to calculate its deferred
tax effect?
I. Final Income taxation is characterized by:
1. Full taxes are withheld by the income payor at
source.
2. Recipient receives the income net of tax
3. Payor is the one required by law to remit the tax to
government
4. Recipient need not file an income tax return
5. Tax withheld constitutes full tax due and deemed
final payments
EXAMPLE:
Mr. C is a depositor of W bank and earns an interest
income of P8,000 in a 6-month time deposit on year
2020. This interest income is subject to 20% final
tax or P1,600.
Requirements: Discuss final income tax using the
names and amounts given.
For example, In final income taxation, Mr. receives
the income of P6,400 net of tax.
1. A is a non-VAT registered tax payer with a grocery store. The following data are available for
2018:
Sales of non food items is P 300,000
Sales of processed food items is P 400,000
Purchases from VAT registered person is P 250,000
Salaries of employees is P 150,000
What is the percentage tax due (net of applicable taxes)?
Chapter 2 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 2 - Prob. 1QECh. 2 - Asset Valuation and Income Recognition. Asset...Ch. 2 - Trade-Offs among Acceptable Accounting...Ch. 2 - Income Flows versus Cash Flows. The text states,...Ch. 2 - Prob. 5QECh. 2 - Prob. 6QECh. 2 - Prob. 7QECh. 2 - Prob. 8QECh. 2 - Computation of Income Tax Expense. A firms income...Ch. 2 - Computation of Income Tax Expense. A firms income...
Ch. 2 - Costs to Be Included in Historical Cost Valuation....Ch. 2 - Effect of Valuation Method for Nonmonetary Asset...Ch. 2 - Prob. 13PCCh. 2 - Prob. 14PCCh. 2 - Prob. 15PCCh. 2 - Deferred Tax Assets. Components of the deferred...Ch. 2 - Interpreting Income Tax Disclosures. The financial...Ch. 2 - Interpreting Income Tax Disclosures. Prepaid Legal...Ch. 2 - Interpreting Income Tax Disclosures. The financial...Ch. 2 - Analyzing Transactions. Using the analytical...Ch. 2 - Prob. 21PCCh. 2 - Starbucks The financial statements of Starbucks...Ch. 2 - Prob. 1BICCh. 2 - Prob. 1CICCh. 2 - Prob. 1DICCh. 2 - Prob. 1EICCh. 2 - Prob. 1FICCh. 2 - Starbucks The financial statements of Starbucks...
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- Federal Income Tax I How does the cash basis method of accounting benefit small business owners, if at all? Under what condition would the cash method of accounting be advantageous as compared with using the accrual methods? Explain. Using your knowledge of GAAP and financial reporting, list and explain one good reason that GAAP should not be used for tax purposes and one good reason that it should be used.arrow_forwardWhich of the following should not be claimed as deductions from gross income? A. Interest payment on loans for the purchase of machinery and equipment used in business. B. Salaries and bonuses paid to employees. C. Discounts given to senior citizens on certain goods and services D. Advertising expense to maintain some form of goodwill for the taxpayer’s business. Which of the following is NOT income tax exempt?* A. BOI-registered enterprise enjoying tax holiday B. Forex transaction income of a Foreign Currency Depositary Unit from another Foreign Currency Depositary Unit C. Forex income in the Philippines of an Offshore Banking Unit D. Regional area headquarter of a multinational company E. None of the Above A resident corporation is one that is: A. Organized under the laws of a foreign country that engages in business in Makati City,Philippines. B. Organized under the laws of the Philippines that…arrow_forwardSports Highlights Ltd. is a publisher of a professional sports magazine. The company reported the following on its December 31, 2021 balance sheet: Income tax receivable $16,250 Deferred tax asset $38,400 The net deferred tax asset relates to two temporary differences: subscription revenue and depreciation/CCA. The company receives subscription payments in advance on the magazine it publishes, the amounts are taxed immediately when received but for accounting purposes are recorded as revenue as they are earned over the subscription period. On December 31, 2021, the balance in the unearned revenue account was $247,000 and it was expected to be earned as follows: 2022 $95,000 2023 80,000 2024 72,000 $247,000 The…arrow_forward
- Sports Highlights Ltd. is a publisher of a professional sports magazine. The company reported the following on its December 31, 2021 balance sheet: Income tax receivable $16,250 Deferred tax asset $38,400 The net deferred tax asset relates to two temporary differences: subscription revenue and depreciation/CCA. The company receives subscription payments in advance on the magazine it publishes, the amounts are taxed immediately when received but for accounting purposes are recorded as revenue as they are earned over the subscription period. On December 31, 2021, the balance in the unearned revenue account was $247,000 and it was expected to be earned as follows: 2022 $95,000 2023 80,000 2024 72,000 $247,000 The…arrow_forwardSports Highlights Ltd. is a publisher of a professional sports magazine. The company reported the following on its December 31, 2021 balance sheet: Income tax receivable $16,250 Deferred tax asset $38,400 The net deferred tax asset relates to two temporary differences: subscription revenue and depreciation/CCA. The company receives subscription payments in advance on the magazine it publishes, the amounts are taxed immediately when received but for accounting purposes are recorded as revenue as they are earned over the subscription period. On December 31, 2021, the balance in the unearned revenue account was $247,000 and it was expected to be earned as follows: 2022 $95,000 2023 80,000 2024 72,000 $247,000 The…arrow_forwardPart A: This year, Gumowski Company has each of the following items in its income statement. 1. Gross profits on installment sales. 2. Revenues on long-term construction contracts. 3. Estimated costs of product warranty contracts. 4. Premiums on officers' life insurance policies with Gumowski as beneficiary. Instructions a. Indicate where deferred income taxes are reported in the financial statements. b. Specify when deferred income taxes would need to be recognized for each of the items above, and indicate the rationale for such recognition. Part B: Gumowski Company's president has heard that deferred income taxes can be classified in different ways in the balance sheet. Instructions Identify the conditions under which deferred income taxes would be classified as a noncurrent item in the balance sheet. What justification exists for such classification?arrow_forward
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