Aa-6 Hafnaoui Company reported pretax net income from continuing operations of $903,500 and taxable income of $712,500. The book-tax difference of $191,000 was due to a $242,000 favorable temporary difference relating todepreciation, an unfavorable temporary difference of $117,000 due to an increase in the reserve for bad debts, and a $66,000 favorable permanent difference from the receipt of life insurance proceeds. The question is "compute HafnaourCompany's deffered income tax expense or benefit

Definition of the Deferred Income Tax: This can be defined as a form of liability to a company…

Answered: Hafnaoui Company reported pretax net…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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Hafnaoui Company reported pretax net income from continuing operations of $912,000 and taxable income of $587,500. The book–tax difference of $352,500 was due to a $235,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $94,000 due to an increase in the reserve for bad debts, and a $211,500 favorable permanent difference from the receipt of life insurance proceeds. At the end of the year, the reserve for bad debts had a balance of $117,500; the beginning balance in the account was $23,500. Hafnaoui's beginning book (tax) basis in its fixed assets was $1,014,000 ($821,000) and its ending book (tax) basis is $1,535,000 ($1,107,000). a. Compute Hafnaoui Company's current income tax expense. b. Compute Hafnaoui Company's deferred income tax expense or benefit. c. Compute Hafnaoui Company's effective tax rate. d. Provide a reconciliation of Hafnaoui Company's effective tax rate with its hypothetical tax rate of 21 percent.
t ces Hafnaoui Company reported pretax net income from continuing operations of $1,168,000 and taxable income of $695,500. The book-tax difference of $472,500 was due to a $315,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $126,000 due to an increase in the reserve for bad debts, and a $283,500 favorable permanent difference from the receipt of life insurance proceeds. At the end of the year, the reserve for bad debts had a balance of $157,500; the beginning balance in the account was $31,500. Hafnaoui's beginning book (tax) basis in its fixed assets was $1,046,000 ($869,000) and its ending book (tax) basis is $1,615,000 ($1,123,000). Problem 17-77 Part b (Algo) b. Compute Hafnaoui Company's deferred income tax expense or benefit. Note: Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit.
Hafnaoui Company reported pretax net income from continuing operations of $1,104,000 and taxable income of $661,500. The book-tax difference of $442,500 was due to a $295,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $118,000 due to an increase in the reserve for bad debts, and a $265,500 favorable permanent difference from the receipt of life insurance proceeds. At the end of the year, the reserve for bad debts had a balance of $147,500; the beginning balance in the account was $29,500. Hafnaoui's beginning book (tax) basis in its fixed assets was $1,038,000 ($857,000) and its ending book (tax) basis is $1,595,000 ($1,119,000). d. Provide a reconciliation of Hafnaoui Company's effective tax rate with its hypothetical tax rate of 21 percent. Note: Amounts to be deducted should be indicated by a minus sign. Round your percentages to 2 decimal places. ETR reconciliation (in $) Income tax expense at 21% Tax benefit from permanent…
The reported pretax financial income of Mechado Company is P1,800,000 and current income tax rate is 30%. Assume the following differences between the financial income and taxable income for the year: 1. Fines paid for late payment of taxes, P15,5002. Premiums paid on life insurance policy on officers, P200,000. Beneficiary named in the policies is Mechado Company.3. Impairment loss recognized on goodwill, P90,0004. Excess of tax depreciation over book depreciation, P30,0005. Excess of warranty expense over actual expenditures, P27,0006. Excess of estimated uncollectible accounts for financial reporting over the accounts actually written off for tax reporting, P12,000.7. Rent collected in advance of period earned, P35,000. Taxable income is?
Randolph Company reported pre-tax net income from continuing operations of $800,000 and taxable income of $500,000. The book-tax difference of $300,000 was due to a $200,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $80,000 due to an increase in the reserve for bad debts, and $180,000 favorable difference from the receipt of life insurance proceeds. Randolph Company's applicable tax rate is 21%. permanent a. Compute Randolph Company's current income tax expense. b. Compute Randolph Company's deferred income tax expense or benefit. Also prepare the journal entries for a. and b. above.
Williams Company reported pretax net income from continuing operations of $1,000,000 and taxable income of $600,000. The book-tax difference of $400,000 was due to a $150,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $90,000 due to an increase in the Allowance for Uncollectible Accounts and a $160,000 favorable permanent difference including non-taxable interest income of $60,000 and $100,000 insurance proceeds from key man insurance. Reconcile the Company’s effective tax rate with its normal 21% tax rate.
The reported pretax financial income of Luciano Company is P1,800,000 and current income tax rate is 30%. Assume the following differences between the financial income and taxable income for the year:1. Fines paid for late payment of taxes, P15,5002. Premiums paid on life insurance policy on officers, P200,000. Beneficiary named in the policies is Luciano Company.3. Impairment loss recognized on goodwill, P90,0004. Excess of tax depreciation over book depreciation, P30,0005. Excess of warranty expense over actual expenditures, P27,0006. Excess of estimated uncollectible accounts for financial reporting over the accounts actually written off for tax reporting, P12,000.7. Rent collected in advance of period earned, P35,000. Question : Taxable income is?
Shaw Corp reported pretax book income of $1,000,000. Included in the computation were favorable temporary differences of $200,000, unfavorable temporary differences of $50,000, and favorable permanent differences of $100,000. Assuming a tax rate of 21 percent, compute the company’s deferred income tax expense or benefit.
Williams Company reported pretax net income from continuing operations of $1,000,000 and taxable income of $600,000. The book-tax difference of $400,000 was due to a $150,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $90,000 due to an increase in the Allowance for Uncollectible Accounts and a $160,000 favorable permanent difference including non-taxable interest income of $60,000 and $100,000 insurance proceeds from key man insurance. Required: Compute the Williams Company’s current income tax expense. Compute the Company’s deferred income tax expense or benefit. Compute the Company’s effective tax rate. Reconcile the Company’s effective tax rate with its normal 21% tax rate.
During the current year, Stern Company had pretax accounting income of $42 million. Stern's only temporary difference for the year was rent received for the following year in the amount of $16 million. Stern's taxable income for the year would be: Multiple Choice $58 million $26 million. $42 million. $47 million.
For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 280,000 Permanent difference (15,600 ) 264,400 Temporary difference-depreciation (20,900 ) Taxable income $ 243,500 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as its deferred income tax liability as of the end of its first year of operations?
77. Hafnaoui Company reported pretax net income from continuing operations of $800,000 and taxable income of $500,000. The book-tax difference of $300,000 was due to a $200,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $80,000 due to an increase in the reserve for bad debts, and a $180,000 favorable permanent difference from the receipt of life insurance proceeds. At the end of the year, the reserve for bad debts had a balance of $100,000; the beginning balance in the account was $20,000. Hafnaoui's beginning book (tax) basis in its fixed assets was $1,000,000 ($800,000) and its ending book (tax) basis is $1,500,000 ($1,100,000). a) Compute Hafnaoui Company's current income tax expense. b) Compute Hafnaoui Company's deferred income tax expense or (benefit). c) Compute Hafnaoui Company's effective tax rate. d) Provide a reconciliation of Hafnaoui Company's effective tax rate with its hypothetical tax rate of 21 percent.

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