ACC-302-Take-Home-Exam2-NO

ACC-302-Take-Home-Exam2-NO - ACC 302 Take Home Exam #3...

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ACC 302 Take Home Exam #3 Problem 1. The following differences between financial and taxable income were reported by Dider Corporation for the current year: (a) Excess of tax depreciation over book depreciation . ... $60,000 (b) Interest revenue on municipal bonds . ................. 9,000 (c) Excess of estimated warranty expense over actual expenditures . ........................................ 54,000 (d) Unearned rent received . .............................. 12,000 (e) Fines paid . .......................................... 30,000 (f) Excess of income reported under percentage-of-comple- tion accounting for financial reporting over completed-contract accounting used for tax reporting . 45,000 (g) Interest on indebtedness incurred to purchase tax-ex- empt securities . ................................... 3,000 (h) Unrealized losses on marketable securities recognized for financial reporting . ............................. 18,000 Assume that Dider Corporation had pretax accounting income [before considering items (a) through (h)] of $900,000 for the current year. Compute the taxable income for the current year. 2. Cardinal Industries computed a pretax financial income of $118,500 for the first year of its operations ended December 31, 2005. Cardinal uses an accelerated cost recovery method on its tax return, and straight-line de- preciation on its books. The difference between the tax and book deduction for depreciation over the five-year life of the assets ac- quired in 2005 are as follows: 2005 . ................................................. $(24,000) 2006 . ................................................. (39,000) 2007 . ................................................. (9,000) 2008 . ................................................. 30,000 2009 . ................................................. 42,000 $ 0 The enacted tax rates for this year and the next four years are as follows:
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ACC-302-Take-Home-Exam2-NO - ACC 302 Take Home Exam #3...

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