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Becker_Review_Problems_Week_2

Becker_Review_Problems_Week_2 - BECKER REVIEW PROBLEMS Week...

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BECKER REVIEW PROBLEMS Week Two NEW QUESTION The following is taken from the Becker CPA Review with permission: XYZ Corp. prepared the following reconciliation of income per books with income per tax return for the year ended December 31, 1989: Book income before income taxes $750,000 Add temporary difference Construction contract revenue which will reverse in 1993 100,000 Deduct temporary difference Depreciation expense which will reverse in equal amounts in each of the next four years (400,000) Taxable Income $450,000 XYZ’s effective income tax rate is 34% for 1989. What amount should XYZ report in its 1989 income statement as the current provision for income taxes? a. $ 34,000 b. $ 153,000 c. $ 255,000 d. $ 289,000 Remember to show calculations! Taken from Becker CPA Review with permission -- company name changed F6/68-CPA-00843 Solution: “b’ is correct at $153,000. Financial statements: $750,000 x 34%, or $255,000 $400,000-100,000 = $300,000 x 34% = $102,000 Tax: $450,000 ($750,000 less $300,000) x 34% = $153,000
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NEW QUESTION The following is taken from the Becker CPA Review with permission:
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