24-26 Please !
Velcro Inc. began business in 2021. In preparing Velcro's financial statements and income tax return for 2022, you discovered the following: . Velcro Inc. leased part of its office building to Sticky Inc. on September 1, 2021, for an advance payment of $156,000. The lease covers 18 months, and the advance payment was for 12 months. On September 1, 2022, Sticky paid the remaining $78,000 on the rent contract. . . . Velcro earned $25,000 of interest from its investment in U.S. Treasury bills. Velcro was fined $15,000 by the Environmental Protection Agency for polluting the air. Velcro did not appeal the EPA's decision and paid the fine in December. Velcro acquired capital assets for $324,000 in 2021. For financial reporting, the assets have a 6- year useful life and $0 salvage. For income taxes, the capital assets are 5-year property and cost will be recovered using the mid-year convention Year Depreciation expense Accounting Tax 2021 S54,000 $ 65,000 2022 54,000104,000 2023 54.000 62.000 2024 54.000 37,000 2025 54,000 37.000 2026 54.000 19,000 Velcro sold some real estate in 2021 for a gain of $130,000. For federal income taxes, the gain will be reported using the installment method. Gain reported on the income statement Gain reported on tax the tax return S130,000 2021 2022 2023 2024 $28,000 40.000 40,000 22.000 . In 2022, Velcro began accruing its one-year limited assurance warranty expense. For 2022, Velcro estimated its warranty expense to be $36,000. Actual warranty work done in 2022 amounted to $24,000. Additional information for 2022: $1,125.000 1.064.000 . 21% Income before income tax reported on the income statement Taxable income reported on line 28 of Form 1120 Tax rate Estimated income tax paid each quarter Deferred tax asset at the beginning of 2022 Deferred tax liability at the beginning of 2022 55,000 21,840 23.730 24. The interest earned on U.S. Treasury bills in 2022 is a A. Temporary difference that should be deducted on line 7 in schedule M-1. B. Permanent difference that should be added on line 4 in schedule M-1. C. Permanent difference that should be deducted on line 7 in Schedule M-1. D. None of the above. 25. Prepare a schedule of future taxable (deductible) amounts at December 31, 2022. See page 21 in my chapter notes to see how this schedule is prepared. 26. Prepare the bottom section of the income statement starting with income before income taxes. See the bottom of page 7 and towards the bottom of page 15 in my chapter notes to see how income tax expense should be disclosed. Velcro Inc. began business in 2021. In preparing Velcro's financial statements and income tax return for 2022, you discovered the following: . Velcro Inc. leased part of its office building to Sticky Inc. on September 1, 2021, for an advance payment of $156,000. The lease covers 18 months, and the advance payment was for 12 months. On September 1, 2022, Sticky paid the remaining $78,000 on the rent contract. . . . Velcro earned $25,000 of interest from its investment in U.S. Treasury bills. Velcro was fined $15,000 by the Environmental Protection Agency for polluting the air. Velcro did not appeal the EPA's decision and paid the fine in December. Velcro acquired capital assets for $324,000 in 2021. For financial reporting, the assets have a 6- year useful life and $0 salvage. For income taxes, the capital assets are 5-year property and cost will be recovered using the mid-year convention Year Depreciation expense Accounting Tax 2021 S54,000 $ 65,000 2022 54,000104,000 2023 54.000 62.000 2024 54.000 37,000 2025 54,000 37.000 2026 54.000 19,000 Velcro sold some real estate in 2021 for a gain of $130,000. For federal income taxes, the gain will be reported using the installment method. Gain reported on the income statement Gain reported on tax the tax return S130,000 2021 2022 2023 2024 $28,000 40.000 40,000 22.000 . In 2022, Velcro began accruing its one-year limited assurance warranty expense. For 2022, Velcro estimated its warranty expense to be $36,000. Actual warranty work done in 2022 amounted to $24,000. Additional information for 2022: $1,125.000 1.064.000 . 21% Income before income tax reported on the income statement Taxable income reported on line 28 of Form 1120 Tax rate Estimated income tax paid each quarter Deferred tax asset at the beginning of 2022 Deferred tax liability at the beginning of 2022 55,000 21,840 23.730 24. The interest earned on U.S. Treasury bills in 2022 is a A. Temporary difference that should be deducted on line 7 in schedule M-1. B. Permanent difference that should be added on line 4 in schedule M-1. C. Permanent difference that should be deducted on line 7 in Schedule M-1. D. None of the above. 25. Prepare a schedule of future taxable (deductible) amounts at December 31, 2022. See page 21 in my chapter notes to see how this schedule is prepared. 26. Prepare the bottom section of the income statement starting with income before income taxes. See the bottom of page 7 and towards the bottom of page 15 in my chapter notes to see how income tax expense should be disclosed
