Assignment
1. For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows:
|
Pretax accounting income
|
$290,000
|
|
Permanent difference
|
(15,000)
|
|
|
275,000
|
|
Temporary difference-depreciation
|
(19,200)
|
|
Taxable income
|
$255,800
|
Tringali's tax rate is 33%. Assume that no estimated taxes have been paid.
What should Tringali report as income tax payable for its first year of operations?
$90,750.
$95,700.
$6,336.
$84,414.
2. For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows:
|
Pretax accounting income
|
$230,000
|
|
Permanent difference
|
(14,800)
|
|
|
215,200
|
|
Temporary difference-depreciation
|
(20,000)
|
|
Taxable income
|
$195,200
|
Tringali's tax rate is 35%.
What should Tringali report as its income tax expense for its first year of operations?
$75,320.
$78,321.
$68,320.
$80,500.
3. Isaac Inc. began operations in January 2016. For certain of its property sales, Isaac recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Isaac recognizes income when it collects cash from the buyer's installment payments.
In 2016, Isaac had $675 million in sales of this type. Scheduled collections for these sales are as follows:
|
2016
|
$ 76 million
|
|
2017
|
132 million
|
|
2018
|
132 million
|
|
2019
|
166 million
|
|
2020
|
169 million
|
|
$675 million
|
Assume that Isaac has a 28% income tax rate and that there were no other differences in income for financial statement and tax purposes.
Ignoring operating expenses, what deferred tax liability would Isaac report in its year-end 2016 balance sheet? (Round your answer to the nearest whole million.)
$599 million
$189 million
$168 million
$21 million
4. The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars):
|
Pretax accounting income:
|
$240
|
|
Pretax accounting income included:
|
|
|
Overweight fines (not deductible for tax purposes)
|
11
|
|
Depreciation expense
|
74
|
|
Depreciation in the tax return using MACRS:
|
124
|
The applicable tax rate is 35%. There are no other temporary or permanent differences.
Franklin's taxable income ($ in millions) is:
$190.
$124.
$50.
$201.
5. Woody Corp. had taxable income of $8,150 in the current year. The amount of MACRS depreciation was $3,100, while the amount of depreciation reported in the income statement was $850. Assuming no other differences between tax and accounting income, Woody's pretax accounting income was:
$11,250.
$5,900.
$10,400.
$5,050.
6. During the current year, Stern Company had pretax accounting income of $36 million. Stern's only temporary difference for the year was rent received for the following year in the amount of $20 million. Stern's taxable income for the year would be:
$16 million.
$41 million.
$56 million.
$36 million.
7. Information for Kent Corp. for the year 2016:
Reconciliation of pretax accounting income and taxable income:
|
Pretax accounting income
|
$178,800
|
|
Permanent differences
|
(15,100)
|
|
|
163,700
|
|
Temporary difference-depreciation
|
(12,400)
|
|
Taxable income
|
$151,300
|
Cumulative future taxable amounts all from depreciation temporary differences:
As of December 31, 2015 $14,100
As of December 31, 2016 $26,500
The enacted tax rate was 26% for 2015 and thereafter.
What should Kent report as the current portion of its income tax expense in the year 2016?
$39,338.
$42,562.
$46,488.
None of these answer choices are correct.
8. Pretax accounting income for the year ended December 31, 2016, was $50 million for Truffles Company. Truffles' taxable income was $60 million. This was a result of differences between straight-line depreciation for financial reporting purposes and MACRS for tax purposes. The enacted tax rate is 30% for 2016 and 40% thereafter. What amount should Truffles report as the current portion of income tax expense for 2016? (Round your answer to the nearest whole million.)
$18 million
$24 million
$15 million
$20 million
9. The financial reporting carrying value of Boze Music's only depreciable asset exceeded its tax basis by $141,000 at December 31, 2016. This was a result of differences between straight-line depreciation for financial reporting purposes and MACRS for tax purposes. The asset was acquired earlier in the year. Boze has no other temporary differences. The enacted tax rate is 26% for 2016 and 34% thereafter. Boze should report the deferred tax effect of this difference in its December 31, 2016, balance sheet as:
A liability of $46,490.
An asset of $46,490.
A liability of $47,940.
An asset of $47,940.
10. Bumble Bee Co. had taxable income of $6,000, MACRS depreciation of $4,000, book depreciation of $2,600, and accrued warranty expense of $850 on the books although no warranty work was performed. What is Bumble Bee's pretax accounting income?
$5,450.
$6,550.
$550.
$3,750.
11. Bumble Bee Co. had taxable income of $6,000, MACRS depreciation of $4,000, book depreciation of $2,600, and accrued warranty expense of $850 on the books although no warranty work was performed. What is Bumble Bee's pretax accounting income?
$5,450.
$6,550.
$550.
$3,750.