Acc423 Intermediate Accounting: Week 4 Individual Assignment (P19-1a, P19-3a, E19-6, E19-9)

Note:  There are other versions of the same questions where the amounts and tax rates are changed so please make sure to compare the questions outlined below to your requirements before buying/submitting.     Acc423 Intermediate Accounting             
Week 4 Individual Assignment (P19-1a, P19-3a, E19-6, E19-9)                    
 
P19-1(a) Three Differences, No Beginning Deferred Taxes, Multiple Rates         
The following information is available for Remmers Corporation for 2012.            
1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $131,200. This difference will reverse in equal amounts of $32,800 over the years 2013-2016.   
2. Interest received on municipal bonds was $11,600.    
3.  Rent collected in advance on January 1, 2012, totaled $62,700 for a 3-year period. Of this amount, $41,800 was reported as unearned at December 31, 2012 for book purposes.
4.  The tax rates are 40% for 2012 and 35% for 2013 and subsequent years.          
5.  Income taxes of $322,200 are due per the tax return for 2012.             
6. No deferred taxes existed at the beginning of 2012.  
               
Instructions:      
a.  Compute the taxable income for 2012.            
               
P19-3(a) Second Year of Depreciation Difference, Two Differences, Single Rate, Extraordinary Item      
The following information has been obtained for the Gocker Corporation.                                          
1. Prior to 2010, taxable income and pretax financial income were identical.                                        
2.  Pretax financial income is $1,718,300 in 2012 and $1,405,100 in 2013.                                  
3. On January 1, 2010, equipment costing $1,264,000 is purchased. It is to be depreciated on a straight-line basis over 5 years for tax purposes and over 8 years for financial reporting purposes. (Hint: Use the half-year convention for tax purposes, as discussed in Appendix 11A.)                                            
4. Interest of $69,800 was earned on tax-exempt municipal obligations in 2013.                                 
5. Included in 2013 pretax financial income is an extraordinary gain of $206,200, which is fully taxable.    
6. The tax rate is 39% for all periods.                                       
7. Taxable income is expected in all future years.                                             
                                               
Instructions:                                      
1. Compute taxable income and income taxes payable for 2013.                                    
 
E19-6 Identify Temporary or Permanent Differences                                     
Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.    
For each item below, indicate whether it involves:                                          
1.  A temporary difference that will result in future deductible amounts and, therefore will usually give rise to a deferred income tax asset.                                            
2. A temporary difference that will result in future taxable amounts and therefore, will usually give rise to a deferred income tax liability.  
3. A permanent difference.                                                           
Use the appropriate number to indicate your answer for each.                                 
a. The MACRS depreciation system is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes for some plant assets.                                          
b.  A landlord collects some rents in advance.  Rents received are taxable in the period when they are received.                                               
c.  Expenses are incurred in obtaining tax-exempt income.                                          
d. Costs of guarantees and warranties are estimated and accrued for financial reporting purposes.         
e. Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes.                                   
f.  Interest is received on an investment in tax-exempt municipal obligations.                                    
g. For some assets, straight-line depreciation is used for both financiaal reporting purposes and tax purposes, but the assets' lives are shorter for tax purposes.                                            
h.  Proceeds are received from a life insurance company because of the death of a key officer.  (The company carries a policy on key officers).                                 
i.  The tax return reports a deduction for 80% of the dividends received from U.S. Corporations. The cost method is used in accounting for the related investments for financial reporting purposes.                              
j. Estimated losses on pending lawsuits and claims are accrued for books.  These losses are tax deductible in the period(s) when the related liabilities are settled.                                 
k.  Expenses on stock options are accrued for financial reporting purposes.                                         
 
E19-9  (Carryback and Carryforward of NOL, No Temporary Differences)  
The pretax financial income (or loss) figures of Synergetics Company are as follows. 
2008       177,400                               
2009       259,300                               
2010       85,600                 
2011       (177,400)                           
2012       (388,500)                           
2013       125,000                               
2014       105,800                               
Pretax financial income (or loss) and taxable income (loss) were the same for all years involved.  Assume a 40% tax rate for 2008 and 2009 and a 35% tax rate for the remaining years.                                           
Prepare the journal entries for the years 2010 to 2014 to record income tax expense and the effects of the net operating loss carrybacks and carryforwards, assuming Synergetics Company uses the carryback provision.  All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that no valuation account is deemed necessary.)        
 
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