# Econ Quiz: Prepare a table of future taxable,deductible amounts.

Econ Quiz: Prepare a table of future taxable,deductible amounts.

Economics
Question:
Hunt Co. at the end of 2015, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:          Pretax financial income                                                                         \$   750,000          Estimated warranty expenses deductible for taxes when paid                    1,200,000          Extra depreciation                                                                                 (1,650,000)          Taxable income                                                                                    \$   300,000 Estimated warranty expense of \$800,000 will be deductible in 2016, \$300,000 in 2017, and \$100,000 in 2018. The use of the depreciable assets will result in taxable amounts of \$550,000 in each of the next three years. Instructions (a)     Prepare a table of future taxable and deductible amounts. (b)     Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015, assuming an income tax rate of 40% for all years.

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Economics
Question:
Denver Co. at the end of 20×1, its first year of operations, prepared reconciliation between pretax financial income and taxable income as follows: Pretax financial income \$300,000 Extra depreciation taken for tax purposes 900,000 Estimated litigation expenses deductible for taxes when paid 1,500,000 Rent collected on the tax return is greater than rent reported on the income statement by \$220,000 Interest income from Denver municipal bonds 100,000 Use of the depreciable assets will result in taxable amounts of \$300,000 in each of the next three years. The estimated litigation expenses of \$1,500,000 will be deductible in 20×4 when settlement is expected. a) Compute the taxable income. b) Prepare the journal entry to record income tax expense, deferred taxes, and income taxes payable for 20×1, assuming a tax rate of 40% for all years.

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Economics
Question:
Consider two imaginary currencies, currency A and currency B. The exchange rate, E, is 1 A = 0.5 B. (Or, equivalently, 1 B = 2 A) a.  What is the nominal interest rate of each? b. What expected exchange rate would be consistent with uncovered interest parity? c. If you started with currency A,  and then exchanged for currency B and bought a bond in currency B. One year from now, the exchange rate at the end of the period turns out to be 1A = 0.45B Do you end up better or worse off than you expected?   face value price A 1000 A 895 A B 1000 B 915 B

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Economics
Question:
In 2014, its first year of operations, Kimble Corp. has a \$800,000 net operating loss when the tax rate is 30%. In 2015, Kimble has \$350,000 taxable income and the tax rate remains 30%. Instructions Assume the management of Kimble Corp. thinks that it is more likely than not that the loss carryforward will not be realized in the near future because it is a new company (this is before results of 2015 operations are known). (a) What are the entries in 2014 to record the tax effects of the loss carryforward? (b) What entries would be made in 2015 to record the current and deferred income taxes and to recognize the loss carryforward? (Assume that at the end of 2013 it is more likely than not that the deferred tax asset will be realized.) Hunt Co. at the end of 2015, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:          Pretax financial income      \$   750,000          Estimated warranty expenses deductible for taxes when paid   1,200,000          Extra depreciation   (1,650,000)          Taxable income \$   300,000 Estimated warranty expense of \$800,000 will be deductible in 2016, \$300,000 in 2017, and \$100,000 in 2018. The use of the depreciable assets will result in taxable amounts of \$550,000 in each of the next three years. Instructions (a)     Prepare a table of future taxable and deductible amounts. (b)     Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015, assuming an income tax rate of 40% for all years.

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Economics
Question:
The following information is provided by Goose Corporation: 1. Prior to 2010, taxable income and pretax financial income wereidentical. 2. Pretax financial income is \$1,700,000 in 2010 and \$1,400,000 in2011. 3. On January 1, 2010, equipment costing \$1,200,000 is purchased.It is to be depreciated on a straight-line basis over 5 years fortax purposes and over 8 years for financial reporting purposes.(Use the half-year convention for tax purposes). 4. Interest of \$60,000 was earned on tax-exempt municipalobligations in 2011. 5. Included in 2011 pretax financial income is an extraordinarygain of \$200,000, which is fully taxable. 6. The tax rate is 35% for all periods. 7. Taxable income is expected in all future years. INSTRUCTIONS: Calculate the amounts for the following journal entry to record in2011- Income Tax Expense- (credit) Income Tax Payable- (debit) Deferred Tax Asset- (debit) Deferred Tax Liability- (debit)