Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 3, Problem 7AP
Refer to the income tax rate structure in the preceding problem. Company K incurs a $22,000 deductible expense. Compute the current year tax savings from the deduction assuming that:
- a. Company K’s taxable income before considering the additional deduction is $65,000.
- b. Company K’s taxable income before considering the additional deduction is $168,000.
- c. Company K has a $4,000 loss before considering the additional deduction.
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KAY Co. reported net income for the current year 2021 at ₱4,180,000 before taxes. Included in the determinationof the said net income were:Current tax rate 30%Non-deductible expenses ₱ 84,000Non-taxable income ₱ 205,000At the beginning of the year:Cumulative temporary difference creating future deductible amount ₱ 1,110,000Cumulative temporary difference creating Future taxable amount ₱ 567,000At the end of the year:Cumulative temporary difference creating future deductible amount ₱ 720,000Cumulative temporary difference creating ₱ 632,000
Required:7. How much is the current tax expense?8. How much is the total tax expense?9. What is the total deferred tax asset to be presented in the 2021 Statement of Financial Position?10. What is the total deferred tax liability to be presented in the 2021 Statement of Financial Position?
Which of the following is true?
A. The total tax due arising from each quarterly income tax return is only applicable to the taxable income for that quarter.
B. The taxable compensation income of mixed-income earners are reported in each quarterly return.
C. When an eligible taxpayer chooses the 8% optional tax, the P250,000 is deducted from the gross sales/receipts from business and other non-operating income in arriving at the tax base for the 8% rate.
D. When a taxpayer who originally opted to be taxed at 8% breaches the VAT threshold at the middle of the year, he shall be liable to the graduated tax from the time it breaches the threshold.
E. None of the other choices is true.
For the year ended December 31, year 1, Tyre Co. reported pretax financial statement income of $7,500,000. Its taxable income was $6,500,000. 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 year 1 of $900,000.
1. What amount should be reported as current tax expense for the current year?
a. 2,250,000
b. 1,950,000
c. 1,050,000
d. 1,350,000
2. What amount should be reported as total income tax expense?
a. 1,350,000
b. 1,950,000
c. 1,050,000
d. 2,250,000
3. What amount of income tax payable should be presented at year end?
a. 2,250,000
b. 1,350,000
c. 1,950,000
d. 1,050,000
Chapter 3 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 3 - Does the NPV of future cash flows increase or...Ch. 3 - Explain the relationship between the degree of...Ch. 3 - Does the after-tax cost of a deductible expense...Ch. 3 - Prob. 4QPDCh. 3 - Prob. 5QPDCh. 3 - Prob. 6QPDCh. 3 - Prob. 7QPDCh. 3 - Which type of tax law provision should be more...Ch. 3 - In the U.S. system of criminal justice, a person...Ch. 3 - Identify two reasons why a firms actual marginal...
Ch. 3 - Prob. 11QPDCh. 3 - Prob. 12QPDCh. 3 - Prob. 1APCh. 3 - Prob. 2APCh. 3 - Prob. 3APCh. 3 - Use a 5 percent discount rate to compute the NPV...Ch. 3 - Consider the following opportunities: Opportunity...Ch. 3 - Prob. 6APCh. 3 - Refer to the income tax rate structure in the...Ch. 3 - Prob. 8APCh. 3 - Company N will receive 100,000 of taxable revenue...Ch. 3 - Prob. 10APCh. 3 - Investor B has 100,000 in an investment paying 9...Ch. 3 - Firm E must choose between two alternative...Ch. 3 - Company J must choose between two alternate...Ch. 3 - Firm Q is about to engage in a transaction with...Ch. 3 - Corporation ABC invested in a project that will...Ch. 3 - Prob. 16APCh. 3 - Investor W has the opportunity to invest 500,000...Ch. 3 - Prob. 18APCh. 3 - Prob. 19APCh. 3 - Prob. 20APCh. 3 - Prob. 21APCh. 3 - Prob. 1IRPCh. 3 - Firm V must choose between two alternative...Ch. 3 - Prob. 3IRPCh. 3 - Refer to the facts in problem 3. Company WB is...Ch. 3 - Prob. 5IRPCh. 3 - Prob. 6IRPCh. 3 - Prob. 7IRPCh. 3 - Prob. 8IRPCh. 3 - Prob. 9IRPCh. 3 - Prob. 1TPCCh. 3 - Firm D is considering investing 400,000 cash in a...
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- FGH Corporation had the following in 2021: Sales P 3.4M; Cost of sales P 1.2M; Admin expense P 0.3M; Selling expenses P .5M; other taxable income from operations P .1M. 1. What is deductible expense if the company uses OSD? 2. Using the problem above, what is the income tax payable?arrow_forward4. 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?arrow_forwardAt the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of a liability account for estimated expenses and its tax base. Taxable income is $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 35%. Required: a. Prepare the journal entry(s) to record income taxes during the period. b.How much will income tax expense be shown in the income statement? c. What will be the balance sheet disclosure during the period regarding taxes?arrow_forward
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