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[answered] 1. For the current year ($ in millions), Centipede Corp. ha


This is an extra credit HW for Intermediate Accounting Chapter 16-Accounting for Income Taxes. Please help me with it. Thanks a lot !
1. For the current year ($ in millions), Centipede Corp. had $86 in pretax accounting

 

income. This included warranty expense of $9 and $23 in depreciation expense. 5 million

 

of warranty costs were incurred (allowed for tax deduction), and MACRS depreciation

 

amounted to $38. In the absence of other temporary or permanent differences, what was

 

Centipede's income tax payable currently, assuming a tax rate of 40%? 2. In 2015, HD had reported a deferred tax asset of $94 million with no valuation

 

allowance. At December 31, 2016, the account balances of HD Services showed a

 

deferred tax asset of $125 million before assessing the need for a valuation allowance and

 

income taxes payable of $82 million. HD determined that it was more likely than not that

 

30% of the deferred tax asset ultimately would not be realized. HD made no estimated tax

 

payments during 2016. What amount should HD report as income tax expense in its 2016

 

income statement? 3. . Southern Atlantic Distributors began operations in January 2016 and purchased a

 

delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a

 

four-year expected useful life for financial reporting purposes. For tax purposes, the

 

deduction is 50% of cost in 2016, 30% in 2017, and 20% in 2018. Pretax accounting

 

income for 2016 was $320,000, which includes interest revenue of $30,000 from

 

municipal bonds. The enacted tax rate is 40%.

 

Assuming no differences between accounting income and taxable income other than those

 

described above:

 

1.

 

Prepare the journal entry to record income taxes in 2016.

 

2.

 

What is Southern Atlantic's 2016 net income? 4. Allmond Corporation, organized on January 3, 2016, had pretax accounting income of

 

$34 million and taxable income of $44 million for the year ended December 31, 2016.

 

The 2016 tax rate is 35%. The only difference between accounting income and taxable

 

income is estimated product warranty costs. Expected payments and scheduled tax rates

 

(based on recent tax legislation) are as follows:

 

2017 $

 

4 million

 

30

 

%

 

2018

 

2 million

 

30

 

%

 

2019

 

2 million

 

30

 

%

 

2020

 

2 million

 

25

 

%

 

Required: Determine the amounts necessary to record Allmond?s income taxes for 2016 and

 

prepare the appropriate journal entry. 5. Wynn Sheet Metal reported an operating loss of $190,000 for financial reporting and tax

 

purposes in 2016. The enacted tax rate is 40%. Taxable income, tax rates, and income taxes paid

 

in Wynn?s first four years of operation were as follows:

 

Taxable

 

Tax

 

Income Taxes

 

Income

 

Rates

 

Paid

 

75,000

 

2012

 

$

 

30%

 

$

 

22,500

 

2013

 

2014

 

2015 85,000

 

95,000

 

75,000 30 25,500 40 38,000 45 33,750 Required:

 

1.

 

Prepare the journal entry to recognize the income tax benefit of the net operating loss.

 

Wynn elects the carryback option.

 


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