Exam 16: Corporate Income Tax

The following information is available for Ryan Corporation: Assets at cost-$260,000 (8 year life, straight-line depreciation, no salvage value, purchased 2 years ago); Accumulated depreciation-$65,000.Accumulated CCA-$105,300; CCA rate-30%; meals and entertainment recorded in the books-$12,000; golf dues paid and expensed on the books-$5,000; pre-tax accounting income-$40,000.No CCA was taken during the current year.Based on this information and a tax rate of 45%, what is taxable income?

KAR Company sold a building resulting in a capital gain of $15,000.Choose the statement below that best describes what the impact of this is:

Which of the following would result in a deferred tax asset?

At the end of 2014, the only expected future temporary difference is implied by the following account found in the balance sheet: Prepaid rent = $22,000 The footnotes reveal that the prepaid rent applies only to 2015.You would also expect to find which of the following in the balance sheet:

List five permanent differences.

When a temporary difference causes cumulative taxable income to rise faster than accounting income reported to date, a Deferred Tax Asset (DTA)will be recognized (Assume that the Taxes Payable Method)is NOT used.

Deferred taxes may be classified as either current or non-current under IFRS.

On January 1, Year 2, GHI Inc.had accrued $100,000 more sales revenue than it had declared for income tax purposes to date.During Year 2, the company had declared $150,000 more in sales revenues on its Year 2 tax return than it had accrued for that year.The income tax rate for Years 2 and prior was 20%.The tax rate for future years was expected to be 25%.This rate was enacted during Year 2.For Year 2, the temporary differences arising from the above would result in:

A company issues $1,000,000, 5-Year bonds on January 1, Year 1.The yield to maturity is 8%, while the bonds provide a coupon rate of 10%, payable once annually on December 31st.The company's tax rate is assumed to be 20% for all years.Prepare the Year deferred tax entries required for Year 2.

Ryan Company paid golf dues on behalf of their two top employees.This is an example of a:

Under the comprehensive allocation method, deferred tax assets and liabilities are valued at the tax rates that are expected to be substantially enacted in the year of reversal.

For inter-period tax allocation, the total income tax expense must be allocated to ongoing operations, discontinued operations and extraordinary items on the income statement.

The phrase "provision for income taxes" encompasses both income tax expenses and liabilities.

CDE had taxable income of $7,500 during 2014.CDE used accelerated depreciation for tax purposes ($10,000)and straight-line depreciation for financial accounting purposes ($4,000).On December 30, 2014, CDE collected January 2015's $3,000 rent on a lot it rents on a month-by-month basis to JCB.CDE's pre-tax accounting income for 2014 would be (show calculations):

All individual temporary differences are expected to fully reverse over time.

Under the indirect method of preparing cash flows from operating activities, deferred income tax expense must be added back to net income.

On January 1, Year 2, GHI Inc.had expensed $100,000 more of warranty expenses than it had deducted for income tax purposes to date.During Year 2, the company had deducted $150,000 more in warranty costs on its Year 2 tax return than it had accrued for that year.The income tax rate for Years 2 and prior was 20%.The tax rate for future years was expected to be 25%.This rate was enacted during Year 2.For Year 2, the temporary differences arising from the above would result in:

Which of the following does not help in explaining why (1)and (2)are different: (1)Income tax expense (2)The product of pre-tax income and the current tax rate.

The following information is available to you: Income before tax $1,540,000, depreciation, $309,000; CCA, $350,000; tax rate, 40%.Prepare the journal entry to record taxes for the year.(Assume there are no previous tax differences.)

ABC Co.in its first year of business has taxable income of $2,000, book depreciation of $3,000 and CCA of $4,600, and recognized $800 of warranty expense but performed no warranty service.ABC's pre-tax accounting income would be: