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A few years ago, Brown Corp. purchased equipment for $20,000,000. Western uses straight-line depreciation for financial reporting and MACRS for tax purposes. At December 31, 2008, the carrying value of the equipment was $18,000,000 and its tax basis was $15,000,000. At December 31, 2009, the carrying value of the equipment was $16,000,000 and the tax basis was $11,000,000. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $25,000,000. A tax rate of 35% applies to all years.
Required:
Prepare one journal entry to record Brown's income tax expense for the current year. Show well-labeled computations for the income tax payable and the change in the deferred tax account.
Question: San Jose Company issued 5-year $200,000 face value bonds at 105 on January 1, 2012. The stated interest rate on these bonds is 9%. Use the straight line method to complete the amortization schedule given.
The company's net income for the year was $12,000 higher under variable costing than under absorption costing. Given these facts, the number of units of product in inventory at the beginning of the year must have been:
Zigs Industries had the following operating results for 2011: sales = $27,960; cost of goods sold = $19,360; depreciation expense = $4,940; interest expense = $2,190; dividends paid = $1,050.
Neer Co. has a probable loss that can only be reasonably estimated within a range of outcomes. No single amount within the range is a better estimate than any other amount. The loss accrual should be:
Winrow Co. purchased 50, 6% Johnston Company bonds for $50,000 cash plus brokerage fees of $500. Interest is payable semiannually on July 1 and January 1. The entry to record the December 31 interest accrual would include:
A barn, destroyed by fire, had a basis of $40,000. The owner received $50,000 in insurance proceeds. The barn was replaced by another barn costing $45,000. The basis of the new barn is:
The infrastructure has a basis of $400 million and would be depreciated over a 40 year life, if depreciation were charged. The amount that would be shown as expense in the Statement of Activities would be:
Inventory is the most important asset for many merchandising companies. How are merchandising inventories accounted for under U.S. GAAP?
Setting discount rates are too high due to fear of future rates tends to bias decisions against making strategic investments.
Edison Company manufactures wool blankets and accounts for production costs using process costing. The following information is available regarding its May inventories. Compute the cost of (a) products transferred from production to finished goods ..
Why is it important to properly value a business's assets and how does asset valuation impact the financial statements of an organization?
The following standards for variable manufacturing overhead have been established for a company that makes only one product:
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