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Accounting for Income Taxes Problem The Beverly corporation had the following transactions and circumstances during 2018 Effective January 2 2018, Beverly made a 40% Investment

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Accounting for Income Taxes Problem The Beverly corporation had the following transactions and circumstances during 2018 Effective January 2 2018, Beverly made a 40% Investment in the Fuse technologies company. Fuse's net Income for calendar year 2018 was $ 90,000,000. Beverly earned interest of $ 7,600,000 on tax-exempt bond investment. On May 1,2018, Beverly sold a building in which it had a carrying value of $ 66,000,000 for $ 52,000,000 in cash. On June 30, 2018, Beverly purchased 100% of the capital stock of Shell electronics co for $ 150,000,000 at a time when the fair value of the stock was $ 120,000,000. The tax authorities permit a level annual cost recovery of goodwill over 15 years. The management of Beverly found no impairment of value in its investment in Shell Electronics in 2018 Beverly paid the annual premium of $5,000,000 for life insurance policies of the company's upper management, but the company does not receive a deduction for those payments. In August, 2018, Beverly had to pay $12,000,000 to the tax authorities based on a miscalculation of prior years taxes. This payment included interest of $ 1,000,000. Beverly's expense for import duties in 2018 was $15,200,000. The company will be permitted one-half of that amount as a deduction in 2018 with no carry-over to future years. In September 2018, Beverly was notified that the courts had determined that a $ 15,000,000 "marketing" payment made during 2018 to a company in the country of Concretia was illegal under the requirement of the U.S Foreign corrupt practices Act. Later that month, Beverly was further notified of a court decision that a similar payment made in 2017 to a Company in Grand Wachovia for $ 18,000,000 was illegal. For 2018, accelerated cost recovery of $36,600,000 was allowed for taxes purposes on Beverly's property plant and equipment. Depreciation determine using generally accepted accounting principles was $ 49,200,000. Beverly made a $ 30,000,000 charitable contribution on January 2, 2016, but is permitted to take only 1/3 of that amount each year as a deduction. At December 31, 2018 Beverly's management made a preliminary calculation of earnings before taxes of $ 200,000,000. However, an accounting error was subsequently discovered (an expense of $ 16,000,000 had been improperly capitalized as an asset) and was corrected. Assuming a blended income tax rate of 40%, prepare a computation of the total income tax liability of the Beverly corporation for 2018. Accounting for Income Taxes Problem The Beverly corporation had the following transactions and circumstances during 2018 Effective January 2 2018, Beverly made a 40% Investment in the Fuse technologies company. Fuse's net Income for calendar year 2018 was $ 90,000,000. Beverly earned interest of $ 7,600,000 on tax-exempt bond investment. On May 1,2018, Beverly sold a building in which it had a carrying value of $ 66,000,000 for $ 52,000,000 in cash. On June 30, 2018, Beverly purchased 100% of the capital stock of Shell electronics co for $ 150,000,000 at a time when the fair value of the stock was $ 120,000,000. The tax authorities permit a level annual cost recovery of goodwill over 15 years. The management of Beverly found no impairment of value in its investment in Shell Electronics in 2018 Beverly paid the annual premium of $5,000,000 for life insurance policies of the company's upper management, but the company does not receive a deduction for those payments. In August, 2018, Beverly had to pay $12,000,000 to the tax authorities based on a miscalculation of prior years taxes. This payment included interest of $ 1,000,000. Beverly's expense for import duties in 2018 was $15,200,000. The company will be permitted one-half of that amount as a deduction in 2018 with no carry-over to future years. In September 2018, Beverly was notified that the courts had determined that a $ 15,000,000 "marketing" payment made during 2018 to a company in the country of Concretia was illegal under the requirement of the U.S Foreign corrupt practices Act. Later that month, Beverly was further notified of a court decision that a similar payment made in 2017 to a Company in Grand Wachovia for $ 18,000,000 was illegal. For 2018, accelerated cost recovery of $36,600,000 was allowed for taxes purposes on Beverly's property plant and equipment. Depreciation determine using generally accepted accounting principles was $ 49,200,000. Beverly made a $ 30,000,000 charitable contribution on January 2, 2016, but is permitted to take only 1/3 of that amount each year as a deduction. At December 31, 2018 Beverly's management made a preliminary calculation of earnings before taxes of $ 200,000,000. However, an accounting error was subsequently discovered (an expense of $ 16,000,000 had been improperly capitalized as an asset) and was corrected. Assuming a blended income tax rate of 40%, prepare a computation of the total income tax liability of the Beverly corporation for 2018

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