Question
BBY is a calendar year accrual method corporation with a marginal and effective tax rate of 34%. It had $5,000,000 of financial income before making
BBY is a calendar year accrual method corporation with a marginal and effective tax rate of 34%. It had $5,000,000 of financial income before making the following cash payments on December 31,2011:
- $4,000paidtoaconsultantforworktobeperformedinJanuary2012.
- $600,000forequipmentdeliveredonDecember1,2011.Theequipmenthasausefullifeof10yearsforfinancialaccountingand7yearsfortaxaccounting.thiswastheonlyassetpurchasedin2011.(MACRSmid-quarterpercentageis3.57.theSec.179deductionwasnottaken)
- $17,000forpropertytaxforthefirstsixmonthsof2012.
- $84,000foratwo-yearofficeleasebeginningDecember1,20111.
- $230,000forinventorypurchases.$100,000wason-handat12/31/11
for each of these expenditures:
- howaretheseexpendituresreportedforfinancialandtaxableincome?
- whatisthefinancialtaxexpense?
- whatistaxliability?
- what is the journal entry to record the tax accrual?
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Fundamental Accounting Principles
Authors: Larson Kermit, Tilly Jensen
Volume I, 14th Canadian Edition
71051503, 978-1259066511, 1259066517, 978-0071051507
