Accounting-. For the current year, Centipede Corp. had $86 in pretax accounting income

Accounting-. For the current year, Centipede Corp. had $86 in pretax accounting income

For the current year, Centipede Corp. had $86 in pretax accounting
Subject: Business    / Accounting   
Question
1. For the current year ($ in millions), Centipede Corp. had $86 in pretax accounting
income. This included warranty expense of $9 and $23 in depreciation expense. 5 million
of warranty costs were incurred (allowed for tax deduction), and MACRS depreciation
amounted to $38. In the absence of other temporary or permanent differences, what was
Centipede's income tax payable currently, assuming a tax rate of 40%? 2. In 2015, HD had reported a deferred tax asset of $94 million with no valuation
allowance. At December 31, 2016, the account balances of HD Services showed a
deferred tax asset of $125 million before assessing the need for a valuation allowance and
income taxes payable of $82 million. HD determined that it was more likely than not that
30% of the deferred tax asset ultimately would not be realized. HD made no estimated tax
payments during 2016. What amount should HD report as income tax expense in its 2016
income statement? 3. . Southern Atlantic Distributors began operations in January 2016 and purchased a
delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a
four-year expected useful life for financial reporting purposes. For tax purposes, the
deduction is 50% of cost in 2016, 30% in 2017, and 20% in 2018. Pretax accounting
income for 2016 was $320,000, which includes interest revenue of $30,000 from
municipal bonds. The enacted tax rate is 40%.
Assuming no differences between accounting income and taxable income other than those
described above:
1.
Prepare the journal entry to record income taxes in 2016.
2.
What is Southern Atlantic's 2016 net income? 4. Allmond Corporation, organized on January 3, 2016, had pretax accounting income of
$34 million and taxable income of $44 million for the year ended December 31, 2016.
The 2016 tax rate is 35%. The only difference between accounting income and taxable
income is estimated product warranty costs. Expected payments and scheduled tax rates
(based on recent tax legislation) are as follows:
2017 $
4 million
30
%
2018
2 million
30
%
2019
2 million
30
%
2020
2 million
25
%
Required: Determine the amounts necessary to record Allmond’s income taxes for 2016 and
prepare the appropriate journal entry. 5. Wynn Sheet Metal reported an operating loss of $190,000 for financial reporting and tax
purposes in 2016. The enacted tax rate is 40%. Taxable income, tax rates, and income taxes paid
in Wynn’s first four years of operation were as follows:
Taxable
Tax
Income Taxes
Income
Rates
Paid
75,000
2012
$
30%
$
22,500
2013
2014
2015 85,000
95,000
75,000 30 25,500 40 38,000 45 33,750 Required:
1.
Prepare the journal entry to recognize the income tax benefit of the net operating loss.
Wynn elects the carryback option.