At Carla Vista Co., events and transactions during 2020 included the following. The tax rate for all items is 20%. (1) Depreciation for 2018 was found to be understated by $120500. (2) A strike by the employees of a supplier resulted in a loss of $100800. (3) The inventory at December 31, 2018 was overstated by $169800. (4) A disposal of a component of the business resulted in a $1985000 loss. The effect of these events and transactions on 2020 net income net of tax would be
Q: At the beginning of 2020, Wertz Construction Company changed from the completed-contract method to…
A: When there is change in the revenue recognition principle of a construction company from completion…
Q: In 2019 Hill Corporation reported a net operating loss of $13,200 that it carried forward to 2020.…
A:
Q: Fores Construction Company reported a pretax operating loss of $135 million for financial reporting…
A: 1.
Q: Sweet Inc. incurred a net operating loss of $489,000 in 2020. The tax rate for all years is 20%.…
A: Operating Loss Carry forward: The operating loss is considered as negative taxable income. When the…
Q: At the end of 2016, its first year of operations, Slater Company reported a book value for its…
A:
Q: On December 31, 2020, Landmark Company reported the following: Income before tax for accounting…
A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…
Q: Riverbed Company reports pretax financial income of $65,000 for 2020. The following items cause…
A: Hey, since there are multiple sub-parts posted, we will answer first three sub-parts.
Q: Prepare slater’s income tax journal entry at the end of 2019 and show how the deferred taxes would…
A: When Book profits are higher than Taxable profits then the difference tax amount shall be treated as…
Q: During 2020 Chua Company became involved in a tax dispute with the BIR. At December 31, 2020, Chua’s…
A: An accrued liability is an expense that a firm has incurred but has not covered yet.
Q: Rode Inc. incurred a net operating loss of $500,000 in 2020. Combined income for 2018 and 2019 was…
A: Prepare the journal entry to record the loss carry back:
Q: During 2020, Alpha Company fully recovered the write-offs made during 2017 worth P100,000. The…
A: Assessable/Taxable Income: It is the income on which tax is imposed and includes pensions,…
Q: On December 31, 2020, Landmark Company reported the following: Income before tax for accounting…
A: Step 1 For the computation of net income after tax in accounting purpose, there is no consideration…
Q: Compute the indirect effect of Bramble’s change in accounting principle that will be reported in the…
A: The change in accounting principle for the purpose of financial statement, will increase the net…
Q: In 2017, Kerry Corp's financial statement showed accrued losses on disposal of unused plant…
A: Deferred tax: Deferred tax arises when there is a temporary difference in recognition of revenue and…
Q: For the year 2020, Tonkatsu Company reported income tax expense of P110,000. Income tax payable at…
A: Calculation of amount of income tax paid during the year... Income tax payable for 2019::P90,000..…
Q: At the beginning of 2016, Norris Company had a deferred tax liability of $6,400, because of the use…
A: I am answering the first 3 sub-parts of the question as per bartleby guidelines. Please re-submit…
Q: On December 31, 2017, Winston Inc. has determined that it is more likely than not that $240,000 of a…
A: Income taxes are the amount of taxes that are to be paid on account of income earned.
Q: In the first year of operations 2021, Samuel Inc. had a pre-tax accounting income of $4,050,000 and…
A: Step 1 When we find income for taxable purpose, it will be different form income under accounting…
Q: At the beginning of 2018, FECC Corporation had discovered that the depreciation expense in the years…
A: Depreciation expense refers to the depreciation amount, that is, the amount of cost of assets that…
Q: On June 30, 2021, Mill Corp. incurred a 100,000 net loss from disposal of a business segment. Also,…
A: Here we will apply the accounting rule that for an interim report all revenues and gains have to be…
Q: The following accounts are extracted from the worksheet of X Company on December 31, 2020: Income…
A: Income from Discontinuing Operations: It is one of the part on income statement of a company . It…
Q: Lolo Inc. had pre-tax accounting income of P900,000 in 2020, its first year of operations. During…
A: Received rent from mama co for the year 2021 in 2020, it means rent is received in advance. it is an…
Q: On December 31, 2020, Landmark Company reported the following: Income before tax for accounting…
A: The following computations are done in the records of the Landmark Company.
Q: The following information is taken from Pork Humba Company's 2020 profit and loss: Profit before…
A: Temporary difference (lesser amount of depreciation on tax return) = Deferred assets / tax rate =…
Q: The following information is taken from Pork Humba Company’s 2020 profit and loss: Profit before…
A: Temporary difference (lesser amount of depreciation on tax return) = Deferred assets / tax rate =…
Q: Hurricane Ltd reports financial income of $100,000 for 2019. The following items cause taxable…
A: Income tax: Income tax refers to the direct tax levied on individual person or business and…
Q: ng Garong Construction Company decided at the beginning of 2020 to change from the cost recovery…
A: The profit-sharing plan refers to the type of retirement plan which helps an employee to be a part…
Q: In 2021, Winslow International, Inc.’s controller discovered that ending inventories for 2019 and…
A: Answer in year 2019, closing stock is overstated by $200,000 means profit increase by $200,000 in…
Q: In 2021, Heartfin Farms reported a pretax accounting loss of $196 million. During the year, the…
A: Through carryback of Net operating loss (NOL), an entity can adjust prior years taxable income for a…
Q: henron, Inc. had pre-tax accounting income of P1,350,000 and a tax rate of 40% in 2020, its first…
A: PARTICULARS AMOUNT IN (P) Pre-Tax Accounting income P1,350,000…
Q: For calendar 2020, Marvel Corporation, Inc., reported depreciation expense of $900,000 on its income…
A: Deferred tax liability is a tax obligation that accumulated in one year but is due to be adjusted in…
Q: What is the amount of taxable temporary difference? 2. What is the amount of total deductible…
A: hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you.…
Q: During 2021, Palm Corporation reported pretax book income of $675,000. Tax depreciation exceeded…
A: Deferred Tax Provisions It is important for the business to calculate the income tax expenses and…
Q: K had income from continuing operations of P800,000 (after taxes) in 2021. In addition, the…
A: GIVEN ÷ income from continuing operations (after taxes) = P800000 loss on inventory = P200,000 loss…
Q: During 2016, its first year of operations, Baginski Steel Corporation reported a net operating loss…
A: Net Operating Loss Carryforward The net operating loss is considered as negative taxable income.…
Q: At the end of 2021, Schrutte Inc. in its first year of operations, had pretax financial income of…
A: Taxable income = Pretax financial income + Estimated expenses deducted but not yet paid - Extra…
Q: On December 31, 2020, Landmark Company reported the following: Income before tax for accounting…
A: “Since you have asked multiple sub-parts, we will solve the first three sub-parts for you. If you…
Q: What amount should be reported as net income for the quarter ended September 30, 2021?
A: Net Income 1,900,000 Gain from expropriation : ( 1,200,000 / 3) (400,000) Change in Accounting…
Q: On December 31, 2020, Landmark Company reported the following: Income before tax for accounting…
A:
Q: On December 31, 2020, Landmark Company reported the following: Income before tax for accounting…
A: Deferred Tax Liabilities are the additional tax payable when the tax as per authorities is higher…
Q: Ross Company has been in business for several years, during which time it has been profitable. For…
A: Net Operating loss carryback: Carry back of net operating losses (NOLs) can help provide cash…
Q: At the end of 2012, its first year of operations, Glow Company prepared a reconciliation between…
A: Tax is the liability calculated on the income earned and paid to the government.
Q: The following accounts are extracted from the worksheet of X Company on December 31, 2020: Income…
A: 1. Discontinued Operations - Discontinued Operations are the those operation those are discontinued…
Q: In 2018, Kardashian Inc. reported pretax accounting income of $240,000. In 2019, the company had a…
A: Carry back of losses is an option for the company to set off the current…
Q: On December 31, 2019, the Board of Directors of EFF Company committed to a plan to discontinue the…
A: A discontinued operation is measured at fair value less cost to sell and it is recognized in the…
Q: At the end of 2021, Schrutte Inc. in its first year of operations, had pretax financial income of…
A: Correct option is D.$100,000 credit to Income Tax Payable account by $100,000.
Q: During 2020, a construction company changed from the completed-contract method to the…
A:
Q: In 2021, Heartfin Farms reported a pretax accounting loss of $196 million. During the year, the…
A: Through carryback of Net operating loss (NOL), an entity can adjust prior years taxable income for a…
At Carla Vista Co., events and transactions during 2020 included the following. The tax rate for all items is 20%.
(1)
(2) A strike by the employees of a supplier resulted in a loss of $100800.
(3) The inventory at December 31, 2018 was overstated by $169800.
(4) A disposal of a component of the business resulted in a $1985000 loss.
The effect of these events and transactions on 2020 net income net of tax would be
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the amount of financial depreciation, resulting in a book value of the depreciable assets of 24,500 for financial reporting purposes and of 20,000 for tax purposes at the end of 2019. In addition, Shadrach recognized a 3,500 estimated liability for legal expenses in the financial statements during 2019; it expects to pay this liability (and deduct it for tax purposes) in 2023. The current tax rate is 30%, no change in the tax rate has been enacted, and the company expects to be profitable in future years. What is the amount of the net deferred tax liability at the end of 2019? a. 300 b. 450 c. 1,050 d. 1,350
- The Bookbinder Company had 500,000 cumulative operating losses prior to the beginning of last year. It had 100,000 in pre-tax earnings last year before using the past operating losses and has 300,000 in the current year before using any past operating losses. It projects 350,000 pre-tax earnings next year. a. How much taxable income was there last year? How much, if any, cumulative losses remained at the end of the last year? b. What is the taxable income in the current year? How much, if any, cumulative losses remain at the end of the current year? c. What is the projected taxable income for next year? How much, if any, cumulative losses are projected to remain at the end of next year?In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO because management believed that FIFO belter represented the flow of their inventory. Management prepared the following analysis showing the effect of this change: Frost reported net income of 2,500,000, 2,400,000, and 2,100,000 in 2018, 2019, and 2020, respectively. The tax rate is 21%. Required: 1. Prepare the journal entry necessary to record the change. 2. What amount of net income would Frost report in 2018, 2019, and 2020? 3. If Frosts employees received a bonus of 10% of income before deducting the bonus and income taxes in 2018 and 2019, what would be the effect on net income for 2018, 2019, and 2020?During 2019, White Company determined that machinery previously depreciated over a 7-year life had a total estimated useful life of only 5 years. An accounting change was made in 2019 to reflect the change in estimate. If the change had been made in 2018, accumulated depreciation at December 31, 2018, would have been 1,600,000 instead of 1,200,000. As a result of this change, the 2019 depreciation expense was 100,000 greater than it would have been if no change were made. Ignoring income tax considerations, what is the proper amount of the adjustment to Whites January 1, 2019, balance of retained earnings? a. 0 b. 100,000 c. 280,000 d. 400,000
- Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2015 when it should have been treated as a cost of production equipment installation costs. As a result of the misclassification, the depreciation through 2018 was understated by 110,000, and depreciation for 2019 was understated by 90,000. What would be the consequences of correcting for the misclassification of the property cost? a. The taxpayer uses the FIFO inventory method, and 25% of goods produced during the period were included in the ending inventory. b. The taxpayer uses the LIFO inventory method, and no new LIFO layer was added during 2019.
- Comprehensive Colt Company reports pretax financial income of 143,000 in 2019. In addition to pretax income from continuing operations (of which revenues are 295,000), the following items are included in this pretax income: Colts taxable income totals 93,000 in 2019. The difference between the pretax financial income and the taxable income is due to the excess of tax depreciation over financial depreciation on assets used in continuing operations. At the beginning of 2019, Colt had a retained earnings balance of 310.000 and a deferred tax liability of 8,100. During 2019, Colt declared and paid dividends of 48,000. It is subject to tax rates of 15% on the first 50,000 of income and 30% on income in excess of 50,000. Based on proper interperiod tax allocation procedures, Colt has determined that its 2019 ending deferred tax liability is 14,100. Required: 1. Prepare a schedule for Colt to allocate the total 2019 income tax expense to the various components of pretax income. 2. Prepare Colts income tax journal entry at the end of 2019. 3. Prepare Colts 2019 income statement. 4. Prepare Colts 2019 statement of retained earnings. 5. Show the related income tax disclosures on Colts December 31, 2019, balance sheet.Duck, an accrual basis corporation, sponsored a rock concert on December 29, 2019. Gross receipts were 300,000. The following expenses were incurred and paid as indicated: Because the coliseum was not scheduled to be used again until January 15, the company with which Duck had contracted did not perform the cleanup until January 810, 2020. a. Calculate Ducks net income from the concert for tax purposes for 2019. b. Using the present value tables in Appendix H, what is the true cost to Duck if it had to defer the 100,000 deduction for the performers until 2020? Assume a 5% discount rate and a 21% marginal tax rate in 2019 and 2020.