Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 17, Problem 17.20E
Uncertain Tax Positions. Based on the information provided in E17-19, assume that Lewis Eagle Corporation reported the following income levels for both book and tax purposes for the following year.
| Description | Amount |
| Income before exclusion | $8,000,000 |
| Tax exclusion | (3,000,000) |
| Income before tax | $5,000,000 |
Assume that Lewis Eagle passed the more-likely-than-not test Based on an analysis of the estimated cumulative probabilities. Lewis Eagle should recognize a tax benefit of $1,950,000. Assuming a tax rate of 30%, prepare the
E17-19. Uncertain Tax Positions. Lewis Eagle Corporation concluded that it was able to exclude $2,500,000 in income from its current tax return Income before the exclusion is $6,000,000. There are no book-tax differences. This income is subject to a 30% tax rate. Based on its technical merits, Lewis Eagle determined that it is more likely than not that the exclusion would be sustained upon examination by tax auditors. The possible outcomes and their related probabilities follow.
| Filed Amount of the Exclusion That Management Expects to Maintain | Likelihood That the Tax Position Will Be Sustained at This Level (%) |
| $2,500,000 | 10% |
| 2,000,000 | 20 |
| 1,500,000 | 25 |
| 1,000,000 | 35 |
| 880,000 | 10 |
Determine the amount of tax benefit from the exclusion that Lewis Eagle should recognize in its tax provision for the current year and prepare the journal entry needed to record the tax provision for the current year.
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Exercise 19-04 (Part Level Submission)
Kingbird Company reports pretax financial income of $73,500 for 2020. The following items cause taxable income to be different than pretax financial income.
1.
Depreciation on the tax return is greater than depreciation on the income statement by $17,600.
2.
Rent collected on the tax return is greater than rent recognized on the income statement by $19,900.
3.
Fines for pollution appear as an expense of $10,500 on the income statement.
Kingbird’s tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2020.
Carla Corporation reports pretax financial income of $262,600 for 2020. The following items cause taxable income to be different
than pretax financial income.
1.
Rental income on the income statement is less than rent collected on the tax return by $62,300.
2.
Depreciation on the tax return is greater than depreciation on the income statement by $43,200.
Interest on an investment in a municipal bond of $5,900 on the income statement.
3.
Carla' tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes
at the beginning of 2020.
(a)
Your answer has been saved. See score details after the due date.
Compute taxable income and income taxes payable for 2020.
Taxable income
%24
275,800
Income taxes payable
24
82,740
Select the best answer to the tax credit and corporate and partnership income tax issues.
Mamey, Inc. had taxable income of $138,500 in 2020. What is the income tax expense for the year 2020?
a. $29,085
b. $25,623
c. $34,625
d. $27,700
Which of the following items might not generally appear on the Schedule M-1 reconciliation
a. Exempt interest income
b. Meal expenses
c. Office material expenses
d. Federal income tax expense
Cubey Industries, Inc. has a net book income of $76,100. For the year it had an income tax expense of $18,900. During the year Cubey received pandemic exempt income of $5,000 and had total food expense of $1,000 on books. What is the result of the Schedule M-1 reconciliation per Schedule line 10.
a. $81,600
b. $90,500
c. $95,500
d. $95,000
The net operating losses (NOLs) that a corporation has available to be used against taxable income for the year 2020 are subject to
a. A limitation of 90% of taxable income
b.…
Chapter 17 Solutions
Intermediate Accounting
Ch. 17 - Prob. 17.1QCh. 17 - When will income tax expense and income taxes...Ch. 17 - Will permanent differences cause the effective tax...Ch. 17 - When do permanent differences arise?Ch. 17 - How are deferred tax assets and deferred tax...Ch. 17 - Prob. 17.6QCh. 17 - Prob. 17.7QCh. 17 - Prob. 17.8QCh. 17 - Prob. 17.9QCh. 17 - How does a firm determine the need for a valuation...
Ch. 17 - Prob. 17.11QCh. 17 - Prob. 17.12QCh. 17 - Prob. 17.13QCh. 17 - How does an entity account for uncertain tax...Ch. 17 - Prob. 17.15QCh. 17 - Prob. 17.16QCh. 17 - Do U.S. GAAP and IFRS classify deferred tax...Ch. 17 - Prob. 17.18QCh. 17 - Cavan Company prepared the following...Ch. 17 - Prob. 17.2MCCh. 17 - Prob. 17.3MCCh. 17 - Prob. 17.4MCCh. 17 - Prob. 17.5MCCh. 17 - Prob. 17.6MCCh. 17 - Prob. 17.7MCCh. 17 - Prob. 17.1BECh. 17 - Income Taxes Payable. Limmox Company has...Ch. 17 - Permanent Differences. Simmox Company's income...Ch. 17 - Permanent Differences. Plimmox Company's income...Ch. 17 - Permanent Differences, Reconciliation of Statutory...Ch. 17 - Prob. 17.6BECh. 17 - Prob. 17.7BECh. 17 - Prob. 17.8BECh. 17 - Prob. 17.9BECh. 17 - Prob. 17.10BECh. 17 - Temporary Differences, Deferred Tax Liability....Ch. 17 - Temporary Differences. Deferred Tax Asset....Ch. 17 - Temporary Differences, Deferred Tax Asset. Using...Ch. 17 - Prob. 17.14BECh. 17 - Realizability of Deferred Assets. Maves, Inc....Ch. 17 - Prob. 17.16BECh. 17 - Prob. 17.17BECh. 17 - Prob. 17.18BECh. 17 - Prob. 17.19BECh. 17 - Prob. 17.20BECh. 17 - Prob. 17.21BECh. 17 - Prob. 17.22BECh. 17 - Prob. 17.23BECh. 17 - Prob. 17.24BECh. 17 - Prob. 17.25BECh. 17 - Prob. 17.26BECh. 17 - Prob. 17.27BECh. 17 - Prob. 17.1ECh. 17 - Prob. 17.2ECh. 17 - Prob. 17.3ECh. 17 - Prob. 17.4ECh. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Prob. 17.7ECh. 17 - Prob. 17.8ECh. 17 - Change in Tax Rates, Permanent Difference,...Ch. 17 - Prob. 17.10ECh. 17 - Prob. 17.11ECh. 17 - Net Operating Loss, Carryback. Phlash Photo Labs,...Ch. 17 - Net Operating Loss, Carryforward. Loggins Lumber...Ch. 17 - Prob. 17.14ECh. 17 - Prob. 17.15ECh. 17 - Net Operating Loss, Carryforward, Tax Rate Change....Ch. 17 - Prob. 17.17ECh. 17 - Prob. 17.18ECh. 17 - Uncertain Tax Positions. Lewis Eagle Corporation...Ch. 17 - Uncertain Tax Positions. Based on the information...Ch. 17 - Prob. 17.21ECh. 17 - Prob. 17.1PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.3PCh. 17 - Prob. 17.4PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.6PCh. 17 - Prob. 17.7PCh. 17 - Prob. 17.8PCh. 17 - Prob. 17.9PCh. 17 - Prob. 17.10PCh. 17 - Prob. 17.11PCh. 17 - Prob. 17.12PCh. 17 - Permanent Differences, Temporary Tax Differences,...Ch. 17 - Prob. 1JCCh. 17 - Prob. 2JCCh. 17 - Prob. 1FSACCh. 17 - Prob. 1SSCCh. 17 - Prob. 2SSCCh. 17 - Prob. 3SSCCh. 17 - Scene 1: The concept of the deferred tax liability...Ch. 17 - Basis for Conclusions Case 2: Uncertain Tax...
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