• Question 1 1 out of 1 points Schedule M-2 is used to reconcile unappropriated retained earnings at the beginning of the year with unappropriated retained earnings at the end of the year. Answer Selected Answer: True Correct Answer: True • Question 2 1 out of 1 points For a corporation in 2012, the domestic production activities deduction is equal to 9% of the higher of (1) qualified production activities income or (2) taxable income. However, the deduction cannot exceed 50% of the W-2 wages related to qualified production activities income. Answer Selected Answer: False Correct Answer: False Response Feedback: For a corporation in 2012, the domestic production activities deduction is equal to …show more content…
Gold Corporation, a personal service corporation (PSC), had gross receipts of $4 million in 2009, $7 million in 2010, and $5 million in 2011. Which of the corporations will be allowed to use the cash method of accounting in 2012? Answer Selected Answer: Both Copper Corporation and Gold Corporation. Correct Answer: Both Copper Corporation and Gold Corporation. Response Feedback: Copper Corporation can use the cash receipts method because it had average annual gross receipts of $5 million or less ($14 million ÷ 3 = $4.67 million) during the three preceding years. Gold Corporation, a PSC, may use the cash method without regard to its gross receipts. • Question 11 1 out of 1 points In 2012, Bluebird Corporation had net income from operations of $75,000. Further, Bluebird recognized a long-term capital loss of $30,000, and a short-term capital gain of $10,000. Which of the following statements is correct? Answer Selected Answer: Bluebird Corporation will have taxable income in 2012 of $75,000 and will have a net capital loss of $20,000 that can be carried back 3 years and forward 5 years. Correct Answer: Bluebird Corporation will have taxable income in 2012 of $75,000 and will have a net capital loss of $20,000 that can be carried back 3 years and forward 5 years. Response Feedback: The capital loss will offset the $10,000 capital gain.
11. Capital Accounts can be Negative. Tax Basis can not be Negative so your Tax Basis will be "0", but the Loss can be carried forward under the At-Risk Rules.
In its current income range LT’s tax rate is at 29%. In 2001 it was taxed at around 30% when it had more than twice the income before taxes. Therefore the current tax rate can be assumed the same for the future. Therefore the tax consequences will depend a lot on whether the investors or the company has more tax rates.
There would still be a net loss in 2006 due to the increase of break-even point, which increased from $7,505 to $8,640.
25-7 If a loss cannot be accrued in the period when ti is probable that an asset had been impaired or a liability had been incurred because the amount of loss cannot be reasonable estimated, the loss shall be charged to the income of the period in which the loss can be reasonably estimated and shall not be charged retroactively to an earlier period. All estimated losses for loss contingencies shall be charged to income rather than charging some to income and others to retained earnings as prior period adjustments.”
For the current year, Water reports and $80,000 long-term capital loss and no capital gains.
Bingo Corporation incurred a net operating loss in 2012. If it carries the loss back, it must first carry the loss back to offset its 2011 taxable income and then it carries any remaining loss back to offset its 2010 taxable income. False
b. Ken sold 1,000 shares of stock for $32 a share. He inherited the stock two years ago. His tax basis (or investment) in the
a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above?
f) To evaluate the material misstatement in the accounts, I think both of the consolidated income statement and the three financial statements are useful. We need to use the information properly from all the financial statements. However the consolidated income statement is the most useful one. If there is a significant change in an account balance comparing with preceding two years, the auditor will examine whether there a material misstatement exists. For instance, the bad debt expense as a percent of net sales in 2011, 2010 and 2009 are 0.56%, 0.70% and 0.69%, respectively. There should
An estimated loss from a loss contingency shall be accrued by a charge to income if both of the following conditions are met:
Name: ________________________________ Date: _________________ [1]BASIC BANK01 - BAT 003 Which of the following statements is true? A. An asset account is increased by a credit B. An expense account is increase by a credit C. A revenue account is decreased by a credit D. An equity account is decreased by a debit [2]BASIC BANK02 - BAT 010 The Income Summary account contains: A. Total revenues and total expenses for the year B. Total assets and total liabilities at year end C. Total revenues, expenses, assets, and liabilities
There presents some positive evidence to avoid the recording of valuation allowance. First, Packer, Inc has a profitable operation history from 1995 to 1997, despite a significant loss in 1994. This is agreed by FASB, which states that a “strong earnings history coupled with evidence indicating that the loss (for example, an unusual, infrequent, or extraordinary item) is an aberration rather than a continuing condition” is a piece of positive evidence (FASB 740-10-30-22). These profits may be carried forward into the future to offset net-operating loss. Secondly, Packer may not generate any significant U.S Federal tax net operating loss carry forwards in the near future because it has the ability to utilize tax planning, such as capitalization of R&D. Thirdly, Packer has never lost deferred tax benefits due to expiration of a US net operating loss carry-forwards.
These net operating loss carryforwards of $265.5 million were entirely from the foreign market, outside of the United States. These losses, mainly related to the operating loss in Brazil, China, Netherlands and Russia. AGCO could reduce their effective tax rate to 34.8% by taking advantage of these unrecognized tax benefit. At December 31, 2014, AGCO had $130.6 million unrecognized income tax benefit, which will all affect company’s effective tax rate even more when these benefits
Net book value at end of year 1 is $8,793. Less what you received on the sale $7,500. Gives you a disposal loss of $1,293 using the straight-line method of depreciation. You then add the disposal loss from the previous years depreciation $1,880, which results in a total income statement impact of $3,173.
This memorandum is intended to communicate the deferred tax issues of Lucent Technologies Inc. on the basis of analysis of the veracity of the situation according to the reporting framework’s guidelines to anticipate unfavorable implications that had been resulted due to poor performance of the company over the past years. The Financial Accounting Standards Board (FASB) is the recognized body for making pronouncements as Generally Accepted Accounting Principles (GAAPs) in the United States. The FASB has promulgated Statement of Financial Accounting Standard # 103 “Accounting for Income Taxes” which specifically prescribes the treatment of income taxes of corporate entities and guidance for how deferred taxes should be