The federal tax rate has been 35% number of years. Assume in the third quarter of 2020 new rate of 40% is approved effective January 1, 2020. At the beginning of the year you had deferred tax assets of ten million and deferred tax liability of six million. You estimate the pretax gaap income will be approximately 5 million in 2020 and that the taxable income will be about 7 million. The company is publicly traded with the 500,000 shares outstanding all year. What effect will be tax rate increase have a balance sheet and income statement for the company for the year 2020? Can actions be taken to minimize the effect?

Question

The federal tax rate has been 35% number of years. Assume in the third quarter of 2020 new rate of 40% is approved effective January 1, 2020. At the beginning of the year you had deferred tax assets of ten million and deferred tax liability of six million. You estimate the pretax gaap income will be approximately 5 million in 2020 and that the taxable income will be about 7 million. The company is publicly traded with the 500,000 shares outstanding all year. What effect will be tax rate increase have a balance sheet and income statement for the company for the year 2020? Can actions be taken to minimize the effect?

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Hello, I attempted this problem but my values are not correct. Can you help me solve this? Thanks!

A: Break-even analysis is the easiest form of cost-volume-profit analysis. Break-even analysis is used ...

Q: Brief Exercise 13-13Larkspur Factory provides a 2-year warranty with one of its products which was f...

A: Prepare the journal entries to record the transactions during 2017: 

Q: Tim and Kate attend St. Peter Roman Catholic Church were they contribute $75 each Sunday by check fo...

A: Generally , one can deduct contributions made by money or property to a qualified institution. A qui...

Q: Every year Blue Industries manufactures 7,300 units of part 231 for use in its production cycle. The...

A: a) Compute the total relevant cost to make part 231: 

Q: 4. ABC company suffered inventory loss from market declines in April 2017. As a result, the company ...

A: As per ASC Section 330-10-35-14, when the cost of the inventory has been written down below its cost...

Q: At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing o...

A: Under standard costing, overhead rates are initially recorded at budgeted rates. However, at the end...

Q: Ruiz Co. provides the following sales forecast for the next four months:    April   May   June   ...

A: Production budget: Production budget is the estimation or projection of number of units the company ...

Q: Affordable Lawn Care, Inc., provides lawn mowing services to both commercial and residential custome...

A: Since we are entitled to answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the que...

Q: Hello, The standards for one case of liquid weed killer are as follows: Direct materials 7 lbs...

A: Calculate raw material usage variance: 

Q: What should a MNC do to prevent bribery?

A: Bribery is the act of giving or receiving something of value in exchange for some kind of influence ...

Q: David Kelley is considering the implementation of an incentive wage plan to increase productivity in...

A: Definition and Goal Accomplishment Plan:Incentive wage is the income earned by the employees in case...

Q: Crane Company’s direct materials budget shows total cost of direct materials purchases for April $30...

A: Cash budget meaningA cash budget is an estimation of the cash inflows and surges for a business over...

Q: Noah Yobs, who has $75,400 of AGI (solely from wages) before considering rental activities, has $67,...

A: We have solved part (a) as part (b) where it is asked to complete Form 1040 (page1) all the personal...

Q: Calculate gross profit, cost of goods sold, and selling price MBI, Inc., had sales of $600 million f...

A: Gross profit: Gross profit is the major part of the firm’s net profit. Gross profit can be calculate...

Q: On January 1, 2018, the Mason Manufacturing Company began construction of a building to be used as i...

A: First of all we will start by calculating the rate or capitalization.For specific borrowings we will...

Q: Confusingly, §1221 defines what is not a capital asset. True False

A: Capital Assets:All property that taxpayers own is capital asset, unless it falls into one of the fol...

Q: Kyle and Liza are married and under 65 years of age. During 2018, they furnish more than half of the...

A: Dependency exemption: The deduction allowed for the care and maintenance of qualifying dependent is ...

Q: Estimating Costs in an Uncertain Environment  Many companies face increasingly unpredictable costs a...

A: When the business is facing uncertain business enviornment, the factors be it revenue or expenditure...

Q: Stratus Inc. purchased equipment for $18,500 and received an invoice with terms 4/10, 3/30, n/45. If...

A: Stratus Incorporation purchased equipment and it had terms 4/10, 3/30, n/45. In this case, the compa...

Q: During the year ended December 31, SC engaged in the following transactions involving notes payable....

A: Journal entries is recording the of the transaction in the accounting journal in a chronological ord...

Q: Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose i...

A: Hey, since there are multiple sub-parts posted, we will answer first three sub-parts. If you want an...

Q: Guenter and Firmin both of whom are CPAs, form a partnership with Guenter investing $100,00 and firm...

A: A general partnership is an agreement in which two or more partners agree to share the profits and l...

Q: How do I properly journalize a accounting cycle?

A: Note: Journalizing is one of the steps of an accounting cycle. Hence, journalizing of accounting tra...

Q: Comprehensive Accounting Cycle Review 9-1 (Part Level Submission) Pina Colada Corp.’s unadjusted tr...

A: Explanation for the entry adjustmentDec 2- The Equipment cost including sales tax needs to be capita...

Q: The purpose of the depreciation adjustment is to:   -spread the cost invested in an asset over its...

A: Depreciation: It refers to the diminution in the financial value of an asset over its useful life du...

Q: Identy the type(s) of gain or loss that would be recognized on the following asset sales as capital,...

A: Capital gain relates to profits on the sale of investments or real estateSec 1231 gains is computed ...

Q: Problem 12-3Information concerning Marigold Corporation’s intangible assets is as follows. 1. On Jan...

A: The amount of franchise fees to be capitalised is Initial fees on signing  -  $16,000Add :Present Va...

Q: Ramos Co. provides the following sales forecast and production budget for the next four months:  ...

A: Budget:Budget refers to the financial plan for the business activities a company intends to do in th...

Q: What is the major reason for a forward stock split?

A: Stock Split: Stock Split is a scheme in which a company’s total number of shares outstanding will ei...

Q: Patents are asset, liability, quity, revenue or expense?

A: Assets: These are the resources owned and controlled by business as a result of a past transaction o...

Q: Walt Bach Company has accumulated the following budget data for the year 2019. Sales: 40000 units, ...

A: Cost of goods sold alludes to the immediate costs inferable from the generation of the goods sold in...

Q: 3) Operating income and tax rates for SALTCO’s first three years of operations were as follows: Inco...

A: It is to be noted that we have created deferred tax in 2017 at the enacted tax rate in 2017. However...

Q: I'm not understanding how to solve this problem. I watched the video given as an example but that ju...

A: a1: Prepare a journal entry to record the cost of transferred-in material.

Q: unland, Inc. produces three types of balloons—small, medium, and large—with the following characteri...

A: Calculate the contribution margin per hour:

Q: What is the difference between grease payment and bribery?  Is grease payment legal per FCPA and per...

A: Grease payment: A grease payment is a payment made to the international or government agencies to ge...

Q: On December 31, 2015 the Neptune Corporation acquired a​custom-made plant asset by issuing a promiss...

A: Present value: Present value (PV) is the current value of the future value (FV) of investment that p...

Q: Problem 12-2Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that pre...

A: The balance on the given dates can be calculated as follows :

Q: GPC, Inc has a $150,000 mortgage liability. The mortgage is payable in monthly instatement of $1,543...

A: Step 1:Given:Mortgage Liability = $ 150,000Monthly Instalment = $1,543Interest Rate           = 12% ...

Q: On January 1, 2019, Bailey Industries had shares outstanding as follows. 6% cumulative preference sh...

A: Click to see the answer

Q: Depreciation calculation methods Gandolfi Construction Co. purchased a used CAT 336DL earth mover at...

A: The depreciation under straight line method is computed by following formula (cost-salvage value)/es...

Q: Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of commo...

A: 1. The stock has been issued at $60. Given par value is $5. SO, excess paid in capital =$60-$5= $552...

Q: Are the answers correct?

A: Variances are computed by subtracting the budgeted costs from actual costs. When actual rates/quanti...

Q: What are the basic differences between preferred stock and common stock?

A: Stock:A security issued in a form of certificate is represented as stock, which denotes the right of...

Q: I'm not understanding how to solve this problem. Please help, thanks!

A: Process firms accumulate production costs by process or department for a given eriod of time. Proces...

Q: What if the invoice date is 12/27, but the invoice is about next year's sevices, should we record th...

A: as per U.S. GAAP, accounts payable should be recorded on receipt of invoices or on accrual basis if ...

Q: Hello, I need help with this question. The work I did was Rims: Direct materials: 17 Direct Labor: 9...

A: Unit product cost represents the total cost of producing one or a single unit. Calculation of unit p...

Q: The MRS , professional soccer team, prepares financial statements on a monthly basis. The soccer sea...

A: Adjusting Entries: Adjusting entries refers to those journal entries which are prepared at the end o...

Q: Hagen Company’s budgeted sales and direct materials purchase are as follows.   Budgeted Sales ...

A: We can anser this question by creating the following schedule of expected payments :

Q: Referring to the question E2-26A in the textbook named Managerial Accounting by Pearson- 5th edition...

A: Expenses: Expenses are costs incurred for the operations of a business. The costs incurred for gener...

Q: Hi, I attempted this problem but did not get the correct values for part 2 (balances of the inventor...

A: 2.Calculate raw material ending balance: