# Are the differences favorable or unfavorable are the

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Chapter 2 / Exercise 28
Elementary and Intermediate Algebra
Tussy/Gustafson
Expert Verified
difference associated with the purchased goodwill in 2017, 2018, and 2019? Are the differencesfavorable or unfavorable? Are the differences permanent or temporary?99)On January 1, 2017, GrowCo issued 50,000 nonqualified stock options (NQOs) valued at \$1 peroption. Each option entitles the owner to purchase one share of stock for \$4. These options vest(accrue) at 20 percent per year for five years beginning in 2017. By the end of 2017, 20,000 of theoptions had vested. At the end of 2018, these options were exercised when the stock price is \$6.25.What is the total book-tax difference associated with the stock options for 2018? Is it favorable orunfavorable? How much of the adjustment is permanent and how much is temporary?14
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Chapter 2 / Exercise 28
Elementary and Intermediate Algebra
Tussy/Gustafson
Expert Verified
100)Imperial Construction Inc. (IC) issued 100,000 incentive stock options (ISOs) to its employees onJanuary 1, 2018 with an estimated value of \$5.50 per option. The options vest (accrue) at 25 percentper year for four years (beginning in 2018). Each option allows the holder to purchase one share ofstock at \$8. On January 1, 2019, employees exercised 12,500 options as IC's stock price reached\$14.72. What is the amount of the book-tax difference in 2019 associated with the incentive stockoptions? Is it favorable or unfavorable? Is it temporary or permanent?101)Pure Action Cycles Inc., a bicycle manufacturer, has a net capital loss in 2018 of \$(64,000). It hadnet capital gains of \$21,500 in 2017, \$45,000 in 2016, \$10,000 in 2015 (but suffered a net operatingloss in 2015), and \$8,000 of net capital gain in 2014. What is the net capital gain in 2017 after thecarryback is applied?102)During 2018, Hughes Corporation sold a portfolio of stock it had held for five years at a loss of\$200,000. It also sold some investment land and recognized a capital gain of \$180,000. In 2016,Hughes reported a net capital gain of \$12,000 and in 2017 it recognized a net capital gain of \$6,000.What is the amount of its net capital loss carryover to 2019?103)In 2018, Webtel Corporation donated \$50,000 to a qualifying charity. For the year, it reportedtaxable income of \$310,000, which included the following: the \$50,000 charitable contribution(before limitation), a \$100,000 dividends received deduction, and a \$20,000 net operating losscarryover. What is Webtel Corp.'s charitable contribution deduction?104)In 2018, Datasoft Inc. received \$350,000 in dividends from CSLabs Inc. Datasoft's taxable incomebefore the dividends received deduction and \$20,000 charitable contribution deduction is \$300,000.What is Datasoft's DRD assuming it owns 15% of the CSLabs Inc. stock?105)AB Inc. received a dividend from CD Corporation and is able to claim a dividends receiveddeduction without limitation. AB owns 10 percent of CD. What is AB's marginal tax rate (to thenearest tenth of a percent) on the dividends received (after taking the DRD into account)?106)In 2018, LuxAir Inc. (LA) has book income of \$160,000. Included in this figure is income generatedfrom ownership in Jet Repair Corporation (JRC), of which LA owns 30%. JRC has \$270,000 inearnings for the year and pays \$32,000 in dividends to LA. Assuming accounting for the investmentin JRC (income from JRC and the DRD) are its only book-tax differences, what is LA's tax liabilityfor 2018? 107)Netgate Corporation's gross regular tax liability for 2018 was \$189,000. What was its taxableincome?108)