1599. CHAPTER 14—TAXES
1599. CHAPTER 14—TAXES ON THE FINANCIAL STATEMENTS Question PR #1
Kooler, Inc., is a domestic corporation. It owns 100% of Texas, Inc., a domestic corporation, 100% of Paris, a foreign corporation, and 45% of Iowa, Inc., a domestic corporation.
|
a. |
Which entities’ incomes are included in Kooler’s combined GAAP financial statements? |
|
|
|
|
b. |
How would your answer change if Kooler instead owned 15% of Iowa? |
|
|
|
|
|
|
1600. CHAPTER 14—TAXES ON THE FINANCIAL STATEMENTS Question PR #2
Bunker, Inc., is a domestic corporation. It owns 100% of Texas, Inc., a domestic corporation, 100% of Paris, a foreign corporation, and 35% of Iowa, Inc., a domestic corporation.
|
a. |
Which entities’ incomes are included in Bunker’s Federal consolidated income tax return? |
|
|
|
|
b. |
How would your answer change if Bunker instead owned 15% of Iowa? |
|
|
|
1601. CHAPTER 14—TAXES ON THE FINANCIAL STATEMENTS Question PR #3
Rochelle, Inc., reported the following results for the current year.
|
Book income (before tax) |
$500,000 |
|
Tax depreciation in excess of book |
25,000 |
|
Non-tax-deductible warranty expense |
17,500 |
|
Municipal bond interest income |
20,000 |
|
|
|
Determine Rochelle’s taxable income for the current year. Identify any temporary or permanent book-tax differences.
|
|
|
1602. CHAPTER 14—TAXES ON THE FINANCIAL STATEMENTS Question PR #4
PaintCo Inc., a domestic corporation, owns 100% of BrushCo Ltd., an Irish corporation. Assume that the U.S. corporate tax rate is 35% and the Irish rate is 10%. PaintCo is permanently reinvesting BrushCo’s earnings outside the United States under ASC 740-30 (APB 23). The corporations’ book income, permanent and temporary book-tax differences, and current tax expense are as follows. Determine PaintCo’s total tax expense reported on its financial statements, its current tax expense (benefit), and its deferred tax expense (benefit).
|
|
PaintCo |
BrushCo |
|
Book income before tax |
$600,000 |
$400,000 |
|
Permanent differences |
|
|
|
Meals & entertainment expense |
40,000 |
–0– |
|
Municipal bond interest income |
(100,000) |
–0– |
|
Temporary differences |
|
|
|
Tax > book depreciation |
(100,000) |
–0– |
|
Book > tax bad debt expense |
20,000 |
–0– |
|
|
|
|
1603. CHAPTER 14—TAXES ON THE FINANCIAL STATEMENTS Question PR #5
PaintCo Inc., a domestic corporation, owns 100% of BrushCo Ltd., an Irish corporation. Assume that the U.S. corporate tax rate is 35% and the Irish rate is 10%. PaintCo is permanently reinvesting BrushCo’s earnings outside the United States under ASC 740-30 (APB 23). The corporations’ book income, permanent and temporary book-tax differences, and current tax expense are as follows. Provide the income tax footnote rate reconciliation for PaintCo using both dollar amounts and percentages.
|
|
PaintCo |
BrushCo |
|
Book income before tax |
$600,000 |
$400,000 |
|
Permanent differences |
|
|
|
Meals & entertainment expense |
40,000 |
–0– |
|
Municipal bond interest income |
(100,000) |
–0– |
|
Temporary differences |
|
|
|
Tax > book depreciation |
(100,000) |
–0– |
|
Book > tax bad debt expense |
20,000 |
–0– |
|
|
|
|
1604. CHAPTER 14—TAXES ON THE FINANCIAL STATEMENTS Question PR #6
Gator, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 34% corporate tax rate and no valuation allowance.
|
|
Tax Debit/(Credit) |
Book Debit/(Credit) |
||
|
Assets |
|
|
||
|
Cash |
$ 300 |
$ 300 |
|
|
|
Accounts Receivable |
5,000 |
5,000 |
|
|
|
Buildings |
300,000 |
300,000 |
|
|
|
Acc. Depreciation |
(150,000) |
(80,000) |
|
|
|
Furniture & Fixtures |
40,000 |
40,000 |
|
|
|
Acc. Depreciation |
(21,000) |
(15,000) |
|
|
|
Total Assets |
$174,300 |
$250,300 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Accrued Litigation Expense |
$ –0– |
($ 27,000) |
|
|
Note Payable |
(116,000) |
(116,000) |
|
|
Total Liabilities |
($116,000) |
($143,000) |
|
|
|
|
|
|
|
Stockholder Equity |
|
|
||
|
Paid in Capital |
($ 1,000) |
($ 1,000) |
|
|
|
Retained Earnings |
(57,300) |
(106,300) |
|
|
|
Total Liabilities and |
($174,300) |
($250,300) |
|
|
|
|
|
|
|
|
Gator Inc.’s gross deferred tax assets and liabilities at the beginning of Gator’s year are listed below.
|
|
Beginning of Year |
|
|
Accrued Litigation Expense |
$21,000 |
|
|
Subtotal |
$21,000 |
|
|
Applicable Tax Rate |
´ 34% |
|
|
Gross Deferred Tax Asset |
$ 7,140 |
|
|
|
|
|
|
Building – Acc. Depreciation |
($61,000) |
|
Furniture & fixtures – Acc. Depreciation |
(3,200) |
|
Subtotal |
($64,200) |
|
Applicable tax rate |
´ 34% |
|
Gross deferred tax liability |
($21,828) |
|
|
|
Gator Inc.’s book income before tax is $6,300. Gator records two permanent book-tax differences. It earned $250 in tax exempt municipal bond interest and $460 in nondeductible meals and entertainment expense. Determine the change in Gator’s deferred tax assets for the current year.
1605. CHAPTER 14—TAXES ON THE FINANCIAL STATEMENTS Question PR #7
Gator, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 34% corporate tax rate and no valuation allowance.
|
|
Tax Debit/(Credit) |
Book Debit/(Credit) |
||
|
Assets |
|
|
||
|
Cash |
$ 300 |
$ 300 |
|
|
|
Accounts Receivable |
5,000 |
5,000 |
|
|
|
Buildings |
300,000 |
300,000 |
|
|
|
Acc. Depreciation |
(150,000) |
(80,000) |
|
|
|
Furniture & Fixtures |
40,000 |
40,000 |
|
|
|
Acc. Depreciation |
(21,000) |
(15,000) |
|
|
|
Total Assets |
$174,300 |
$250,300 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Accrued Litigation Expense |
$ –0– |
($ 27,000) |
|
|
Note Payable |
(116,000) |
(116,000) |
|
|
Total Liabilities |
($116,000) |
($143,000) |
|
|
|
|
|
|
|
Stockholder Equity |
|
|
||
|
Paid in Capital |
($ 1,000) |
($ 1,000) |
|
|
|
Retained Earnings |
(57,300) |
(106,300) |
|
|
|
Total Liabilities and |
($174,300) |
($250,300) |
|
|
|
|
|
|
|
|
Gator Inc.’s gross deferred tax assets and liabilities at the beginning of Gator’s year are listed below.
|
|
Beginning of Year |
|
|
Accrued Litigation Expense |
$21,000 |
|
|
Subtotal |
$21,000 |
|
|
Applicable Tax Rate |
´ 34% |
|
|
Gross Deferred Tax Asset |
$ 7,140 |
|
|
|
|
|
|
Building – Acc. Depreciation |
($61,000) |
|
Furniture & fixtures – Acc. Depreciation |
(3,200) |
|
Subtotal |
($64,200) |
|
Applicable tax rate |
´ 34% |
|
Gross deferred tax liability |
($21,828) |
|
|
|
Gator Inc.’s book income before tax is $6,300. Gator records two permanent book-tax differences. It earned $250 in tax exempt municipal bond interest and $460 in nondeductible meals and entertainment expense. Determine the net deferred tax asset or net deferred tax liability at year end.
|
|
|
1606. CHAPTER 14—TAXES ON THE FINANCIAL STATEMENTS Question PR #8
Gator, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 34% corporate tax rate and no valuation allowance.
|
|
Tax Debit/(Credit) |
Book Debit/(Credit) |
||
|
Assets |
|
|
||
|
Cash |
$ 300 |
$ 300 |
|
|
|
Accounts Receivable |
5,000 |
5,000 |
|
|
|
Buildings |
300,000 |
300,000 |
|
|
|
Acc. Depreciation |
(150,000) |
(80,000) |
|
|
|
Furniture & Fixtures |
40,000 |
40,000 |
|
|
|
Acc. Depreciation |
(21,000) |
(15,000) |
|
|
|
Total Assets |
$174,300 |
$250,300 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Accrued Litigation Expense |
$ –0– |
($ 27,000) |
|
|
Note Payable |
(116,000) |
(116,000) |
|
|
Total Liabilities |
($116,000) |
($143,000) |
|
|
|
|
|
|
|
Stockholder Equity |
|
|
||
|
Paid in Capital |
($ 1,000) |
($ 1,000) |
|
|
|
Retained Earnings |
(57,300) |
(106,300) |
|
|
|
Total Liabilities and |
($174,300) |
($250,300) |
|
|
|
|
|
|
|
|
Gator Inc.’s gross deferred tax assets and liabilities at the beginning of Gator’s year are listed below.
|
|
Beginning of Year |
|
|
Accrued Litigation Expense |
$21,000 |
|
|
Subtotal |
$21,000 |
|
|
Applicable Tax Rate |
´ 34% |
|
|
Gross Deferred Tax Asset |
$ 7,140 |
|
|
|
|
|
|
Building – Acc. Depreciation |
($61,000) |
|
Furniture & fixtures – Acc. Depreciation |
(3,200) |
|
Subtotal |
($64,200) |
|
Applicable tax rate |
´ 34% |
|
Gross deferred tax liability |
($21,828) |
|
|
|
Gator Inc.’s book income before tax is $6,300. Gator records two permanent book-tax differences. It earned $250 in tax exempt municipal bond interest and $460 in nondeductible meals and entertainment expense. Determine the change in Gator’s deferred tax liabilities for the current year.
|
|
|
|
|
1607. CHAPTER 14—TAXES ON THE FINANCIAL STATEMENTS Question PR #9
Gator, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 34% corporate tax rate and no valuation allowance.
|
|
Tax Debit/(Credit) |
Book Debit/(Credit) |
||
|
Assets |
|
|
||
|
Cash |
$ 300 |
$ 300 |
|
|
|
Accounts Receivable |
5,000 |
5,000 |
|
|
|
Buildings |
300,000 |
300,000 |
|
|
|
Acc. Depreciation |
(150,000) |
(80,000) |
|
|
|
Furniture & Fixtures |
40,000 |
40,000 |
|
|
|
Acc. Depreciation |
(21,000) |
(15,000) |
|
|
|
Total Assets |
$174,300 |
$250,300 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Accrued Litigation Expense |
$ –0– |
($ 27,000) |
|
|
Note Payable |
(116,000) |
(116,000) |
|
|
Total Liabilities |
($116,000) |
($143,000) |
|
|
|
|
|
|
|
Stockholder Equity |
|
|
||
|
Paid in Capital |
($ 1,000) |
($ 1,000) |
|
|
|
Retained Earnings |
(57,300) |
(106,300) |
|
|
|
Total Liabilities and |
($174,300) |
($250,300) |
|
|
|
|
|
|
|
|
Gator Inc.’s gross deferred tax assets and liabilities at the beginning of Gator’s year are listed below.
|
|
Beginning of Year |
|
|
Accrued Litigation Expense |
$21,000 |
|
|
Subtotal |
$21,000 |
|
|
Applicable Tax Rate |
´ 34% |
|
|
Gross Deferred Tax Asset |
$ 7,140 |
|
|
|
|
|
|
Building – Acc. Depreciation |
($61,000) |
|
Furniture & fixtures – Acc. Depreciation |
(3,200) |
|
Subtotal |
($64,200) |
|
Applicable tax rate |
´ 34% |
|
Gross deferred tax liability |
($21,828) |
|
|
|
Gator Inc.’s book income before tax is $6,300. Gator records two permanent book-tax differences. It earned $250 in tax exempt municipal bond interest and $460 in nondeductible meals and entertainment expense. Determine Gator’s change in net deferred tax asset or net deferred tax liability for the current year and provide the journal entry to record this amount.
1608. CHAPTER 14—TAXES ON THE FINANCIAL STATEMENTS Question PR #10
Gator, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 34% corporate tax rate and no valuation allowance.
|
|
Tax Debit/(Credit) |
Book Debit/(Credit) |
||
|
Assets |
|
|
||
|
Cash |
$ 300 |
$ 300 |
|
|
|
Accounts Receivable |
5,000 |
5,000 |
|
|
|
Buildings |
300,000 |
300,000 |
|
|
|
Acc. Depreciation |
(150,000) |
(80,000) |
|
|
|
Furniture & Fixtures |
40,000 |
40,000 |
|
|
|
Acc. Depreciation |
(21,000) |
(15,000) |
|
|
|
Total Assets |
$174,300 |
$250,300 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Accrued Litigation Expense |
$ –0– |
($ 27,000) |
|
|
Note Payable |
(116,000) |
(116,000) |
|
|
Total Liabilities |
($116,000) |
($143,000) |
|
|
|
|
|
|
|
Stockholder Equity |
|
|
||
|
Paid in Capital |
($ 1,000) |
($ 1,000) |
|
|
|
Retained Earnings |
(57,300) |
(106,300) |
|
|
|
Total Liabilities and |
($174,300) |
($250,300) |
|
|
|
|
|
|
|
|
Gator Inc.’s gross deferred tax assets and liabilities at the beginning of Gator’s year are listed below.
|
|
Beginning of Year |
|
|
Accrued Litigation Expense |
$21,000 |
|
|
Subtotal |
$21,000 |
|
|
Applicable Tax Rate |
´ 34% |
|
|
Gross Deferred Tax Asset |
$ 7,140 |
|
|
|
|
|
|
Building – Acc. Depreciation |
($61,000) |
|
Furniture & fixtures – Acc. Depreciation |
(3,200) |
|
Subtotal |
($64,200) |
|
Applicable tax rate |
´ 34% |
|
Gross deferred tax liability |
($21,828) |
|
|
|
Gator Inc.’s book income before tax is $6,300. Gator records two permanent book-tax differences. It earned $250 in tax exempt municipal bond interest and $460 in nondeductible meals and entertainment expense. Calculate Gator’s current tax expense.
|
|
|
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
