Chapter 6 Solution Manual - South Western Federal Tax 2012

each element in your Question 1 pro forma profit and loss statement. Are there any items that

ALL assignments are required to have a TITLE page which must include the course number and section, team member names, assignment number and due date. Any written component must be prepared using a word processor. Diagrams, charts, and graphs should be constructed using computer software. A portion of the marks for computer constructed diagrams is awarded for professionalism of display. Written answers are to be expressed in complete thoughts. Check spelling and grammar. Answers to assignment questions are to be presented in numerical order. Staple the answer sheets once in the upper left hand corner.

The aim of this report is to distinguish between capital expenditure and revenue expenditure and to explain the accounting treatment of different transactions. The classification of expenditures as capital or revenue will have an impact on the statements of financial position and comprehensive income. Therefore, when preparing financial statements, accountants need to adhere to and comply with the rules and regulations set out by the International Accounting Standards Board (IASB). As such, the report is limited to discussing the various expenditures covered by accounting standards. Furthermore, the report identifies what items can be recorded in accounts as assets in terms with the relevant accounting standards.

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After careful study of this chapter, you will be able to: 1. 2. 3. 4. 5. 6. 7. 8. 9. Understand permanent and temporary differences. Explain the conceptual issues regarding interperiod tax allocation. Record and report deferred tax liabilities. Record and report deferred tax assets. Explain an operating loss carryback and carryforward. Account for an operating loss carryback. Account for an operating loss carryforward. Apply intraperiod tax allocation. Classify deferred tax liabilities and assets.

Provide answers for six of the questions below. It is your choice which six you answer. Upload your completed exam at or before the deadline on our course’s Blackboard page under the “Exams” tab. Proper citations are required for all references. I will look at drafts of your exam up to a week before it is due. You may discuss the strategy that you are taking to complete the exam questions with fellow classmates, but you may not give them access to your actual written work. Honesty on your part is presumed.

Required: a. Write journal entries for each accounting transaction in the space provided below (explanations for the journals are not necessary and you do not need to worry about any adjusting entries to be made at the end of October related to the transactions). 4 points each, 28 points. b. For each transaction, explain how the income statement could be affected. Specifically, what amount and under what category will be reported on the income statement. 2 points each, 14 points.

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The Income of Loss statement shows the organization's performance over a given point in time and is ongoing. Calculations must be honest and accurate according to government regulations such as the SOX for, otherwise, penalties are severe including imprisonment, fine, and closure of business. The income statements show overall profit or loss of business and business progression. The Cash Flow Statement is the document that is required for courtroom use for the fictional or quasi-fictional expenses that are not included in eh Income Statement. One such instance may be "depreciation" where a lump sum is spread over a period of time. 'Amortization" is another instance where the lump-sum is distributed for an intangible product over a certain period of time

An 'income statement ' gives a summary of the revenues and expenses occurred over a period of time; however, it only provides information on revenue and does not represent the cash flow of that organization (Zelman et al., 2014). Although technically, the term 'income statement ' is for "investor-owned entities" whereas ' statement of operations ' is for "not-for-profit entities," for the purpose of this paper, the terms 'income statement ' and 'statement of operations ' will be used interchangeably (Zelman et al., 2014). In addition to the title/heading, the 'body ' component of the income statement or statement of operation consists of an outline of the revenues, gains, expenses, losses, and net income/loss (Bragg, 2015; Inc., 2013).

Capital allowances Chapter 7 Basis period Chapter 8 Trading losses Chapter

In this section the book discusses the income tax expenses and allowances, annually companies prepare their financial statements by using the GAAP and the Internal Revenue Code so that the stockholders can use the information in order to file their tax returns. Even though companies use these two methods, but they work in different ways in the accounting rules recognize revenues and expenses which can show on the companies income statement. Companies would rather report lower income to their taxing agents instead to the stockholders in order to decrease their tax liability and

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The objective of a general purpose financial report is to deliver financial information about the reporting entity. Decisions about equity and debt instruments depend on the returns that they expect from an investment in those instruments. To assess an entity’s prospects for future net cash inflows information is needed about several aspects of the entity including but not limiting to, resources of the entity and claims against the entity. General purpose financial reports do not provide all the information needed for users, thus this information needs to be gathered from other sources such as general economic decisions. General purpose financial reports are not intended to show the value of a reporting entity. Knowledge about the nature and amounts of a reporting entity’s economic resources is used to assist users identify strengths and weaknesses within a reporting entity. Accrual accounting is