Exercise 3

Spartans Corp. is a calendar year accrual basis C Corporation. The following information has been provided:

Book income for Year 2 Foreign Derived Intangible Income Deduction

Accumulated book depreciation at Year 1 end Accumulated tax depreciation at Year 1 end

Book depreciation expense for Year 2 Tax depreciation expense for Year 2

Accumulated book depreciation at Year 2 end Accumulated tax depreciation at Year 2 end

Reserve for bad debt at Year 1 end Reserve for bad debt at Year 2 end

Accrued vacation (no payment w/in 2.5 mos.) as of Year 1 end Accrued vacation (no payment w/in 2.5 mos.) as of Year 2 end

Interest capitalized for books, deductible for tax, Year 1 Interest capitalized for books, deductible for tax, Year 2

Loss carryforward as of Year 1 end Loss carryforward as of Year 1 end on a more likely than not basis900,000

Assume the Company did not record any UTB as of Year 1 end as part of the year end provision analysis (i.e. gross NOL DTA was 1,300,000 as of Year 1 end)

Spartans Corp. Statutory tax rate as of Year 1end 35% Spartans Corp. estimated Statutory tax rate for Year 2 21%

Determine Spartans Corp. ASC 740 provision for Year 2 (current and deferred provision as well as the current tax liability and deferred tax asset/liability balance) and record the journal entry.

* Consider preparing a proof of total tax provision by preparing a rate reconciliation.

$2,500,000 200,000

700,000 800,000

500,000 900,000

2,000,000 2,500,000

200,000 70,000

60,000 100,000

0 80,000

1,300,000

3

Business 225L Class 3 - Homework

Mini-Project

1. a) Locate and read the eBay 10-K for year ended December 31, 2018

2. b) Identify all of the required disclosures from the Class 3 reading assignment

   and match those required disclosures to the eBay 10-K.

3. c) Please write the ASC 740 citation for the relevant disclosure requirements

   next to the each section of the footnote in the eBay 10-K.