homework6.docx - Chapter 6 2 A $13,750 34($92,000 $75,000 =...

This preview shows page 1 - 2 out of 2 pages.

Chapter 6 2. A. $13,750 + 34%*($92,000 - $75,000) = $19,530 B. Annualized income = $92,000 * (12/4) = $276,000 $22,250 + 39%*($276,000 - $100,000) = $90,890 5. FruAgro’ s taxable income = $23.4 + $15.5 = $38.9 million 7. A. No effect C. No effect 8. Although Firm Q is a cash basis taxpayer and received only $10,000 cash , it rec- ognizes the $23 ,400 total value of the cash and non-cash payment as taxable in- come. 10. A. If Malo Inc. is a cash basis tax payer it should not recognize income for the services rendered nor $5,000 for prepaid parking. D. If Malo Inc. is an accrual basis tax payer it should recognize $9,500 income for the services rendered and also $5,000 for prepaid parking. 19. a. Tax expense = $700,000 *34% = $238,000 b. Tax payable = $810,000 * 34% = $275,400 c. The excess of tax payable over tax expense is a $37,400 net increase in de- ferred tax assets 22. Net income before tax $505,100 Deduction ($319,000 * 9%) (28,764) Prepaid income 40,000 Accrued expense No difference Net operating loss deduction (21,400) Taxable income $494,936 25. a. KLP uses the cash method of accounting , it can deduct $100,000 in the year of payment. d. For financial statement purposes , KLP must accrue a $100,000 expense in
Image of page 1

Subscribe to view the full document.

Image of page 2
  • Fall '16
  • Ryan

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern