Burcham Corporation reported pretax book income of $752,500. Tax depreciation exceeded book depreciation by $620,000. In addition, the company received $320,000 of tax-exempt municipal bond interest. The company’s prior-year tax return showed taxable income of $117,000. Compute the company’s book equivalent of taxable income. Use this number to compute the company’s total income tax provision or benefit.
Answers
Answer:
a. Taxable income/loss = (-$187500)
b. Current income tax benefit = $39780
Explanation:
Lets first understand the difference between reported income and taxable income. Reported income is the income earned by an entity during an accounting period which is calculated based on accounting rules and conventions whereas taxable income is calculated by tax authorities based on their own policies.
Now an important thing here to note is 'accounting concepts differ from tax policies (i.e permanent differences), so due to the differences in the policies two income figures are calculated separately by the entities following accounting conventions and tax authorities.
For example accounting follows the accruals concept which requires entities to record expenses and revenue in the period they are incurred whereas tax authorities might be following a cash basis of accounting so they wouldn't be allowing any expenses that are non-cash, such as accounting depreciation which is replaced by tax depreciation.
Now coming to the calculation, taxable income is calculated by adding back non-cash items, deducting items that are tax-exempt and adding back items that are dis-allowable under tax authorities.
The taxable income is calculated as follows;
Pretax book income = $752500
less: tax depreciation = (-$620000)
less: tax-exempt income = (-$320000)
Taxable income/loss = (-$187500)
Burhcham corporation has made a loss of (-$187500) which means Burcham has no tax liability this year.
Assuming a tax rate of 34% and that tax losses can be carried backward.
A tax relief could be claimed by Burhcam corporation as follows.
Burcham corporation's prior-year taxable income was $117000 so the tax relief is equal to $117000×34%=$39780
Current income tax benefit = $39780
The remaining $70500 ($187500 - 117000) net operating loss will be recorded as a deferred tax asset with the amount of tax (i.e $70500×34%) $23970.
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Answers
Based on writing standards, the inquiryletter for purchase should begin with the sender's address and be written like a formal letter.
Structures of Letter of Inquiry.
- The sender's address should be written at the beginning of the letter, followed by the receiver's address.
- The letter must contain all the elements of the enquiring item, including their quantities.
- There must be the date and address of the receiver included.
- The letter's subject must be written clearly before the letter's content.
- Ensure you provide the expected salutation at the beginning of the letter.
- Write clearly and straightforward.
- Provide reasons and inquiry descriptions.
- Add your signature, name, and designation at the end of the letter.
Hence, in this case, it is concluded that there are specific ways to write a good inquiry letter.
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Answers
Answer:
2.64%
Explanation:
It requires application of basic time value of money function
n = 17
FV = $308,700
PV = $198,300
FV = PV * (1 + r)n
$308,700 = $198,300 * (1 + r)^17
$308,700 / $198,300 = ($198,300 * (1 + r)^17) / $198,300
1.556732 = (1 + r)^17
Taking 17th root of equation
1.0264 = 1 + r
r = 2.64%
Answers
Answer:
b. No
Explanation:
This is not an effective strategy for self-improvement. In this sentence, the author tells us that he believes he will be able to score 25 goals in a soccer game. This is extremely unlikely even for the best soccer players in the world. Therefore, the goal is unrealistic. By creating unrealistic or unachievable goals, we only make it more difficult for us to succeed, and the failiure that will inevitably follow can be damaging to our confidence. Therefore, when establishing goals, it is important that we are realistic.
Final answer:
In the context of scoring 25 goals in a soccer game, self-improvement strategies should be focused on enhancing existing skills and addressing areas of need, keeping the goal realistic. Practice, feedback, and self-reflection can aid in achieving this. The process requires patience and commitment.
Explanation:
The approach of self-improvement based on individual strengths and needs involves setting realistic goals and continually assessing progress on these goals. In the context of your goal to score 25 goals in a soccer game, it is critical to evaluate this target against your current abilities and the opportunities you will have in the game. The target should be challenging but realistic.
Improvement strategies might focus on enhancing your current strengths, like speed or accuracy, and addressing areas of need, such as endurance or team coordination. These strategies can include deliberate practice, receiving feedback, and self-reflection. Whatever the strategy, remember that self-improvement is a gradual and ongoing process that requires patience and commitment.
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Answers
Answer:
Explanation:
a. The computation of the economic order quantity is shown below:
=
where,
Carrying cost = $20 × 15% = 3
And, the annual demand = 450 bicycles × 12 months × 2 tyres = 10,800
And, the ordering cost is $50
Now put these values to the above formula
So, the value would equal to
=
= 600 tires
b. The number of orders would be equal to
= Annual demand ÷ economic order quantity
= $10,800 ÷ 600 tires
= 18 orders
c. The average annual ordering cost would equal to
= Number of orders × ordering cost
= 18 orders × $50
= $900
Final answer:
The Economic Order Quantity for the company is around 240 units. This leads to an estimated 23 orders per year with an average annual ordering cost of $1150.
Explanation:
The Economic Order Quantity (EOQ) is calculated using the equation √((2DS)/H). In this example, D represents the demand rate which is the number of bicycles produced a year (450 per month times 12, totaling 5400). S represents the ordering cost ($50) and H represents the holding cost which is 15% of the tire cost ($20) per unit, totaling $3 per unit.
So if you substitute these values into the formula, the EOQ equals √((2 * 5400 * 50)/3), which results in approximately 240 units. From this solution, the number of orders per year would be the annual demand divided by the EOQ, i.e., 5400 / 240 giving approximately 22.5 orders (rounded upwards it means 23 orders per year). The average annual ordering cost would be the cost per order times the number of orders per year (23 * $50), resulting in $1150.
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Answers
Answer:none of above
Explanation:
Answers
Answer:
Alternative A has lower incremental revenue but it's lower incremental costs makes the net income higher than of Alternative B.
Explanation:
Alternative A
The net income is computed with the formula as:
Net Income = Incremental Revenue - Incremental Cost
= $160,000 - $100,000
= $60,000
Alternative B
The net income is computed with the formula as:
Net Income = Incremental Revenue - Incremental Cost
= $180,000 - $125,000
= $55,000
Alternative A has lower incremental revenue but it's lower incremental costs makes the net income higher than of Alternative B.
Assuming the company is considering two alternatives. Alternative A to Alternative B net income is: $60,000; $55,000.
Net income
Alternative A Alternative B Net Income Increase (Decrease)
Revenues $ 160,000 $100,000 $60,000
($160,000-$100,00)
Costs $180,000 125,000 $55,000
($180,000-$125,000)
Inconclusion Alternative A to Alternative B net income is: $60,000; $55,000.
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