Answer:
b. companies can use accounting methods that minimize net income for tax purposes and other methods that maximize net income for reporting to shareholders.
As they use a basis for accounting and prepare the financial statement temporary difference arise which, are settled overtime as in the end both, tax basis and accounting basis much get the same income
The most common example is depreciation if a company uses S179 and depreciate the entire of the asset purchase next year, while the accounting will have a depreciation expense associate with the equipment for tax purposes this assets basis is zero as it was completely depreciate thus, it will have a higher income making more tax payable than accounting income tax expense.
Explanation:
a. corporations often make errors in their tax estimations.
While this can occur is not the reason for deferred income taxes
c. the IRS owes a company a refund from last year.
No, the refund will not generate deferrd income tax It will be a receivable for the company.
d. large corporations generally have operations in foreign countries whose tax law is quite different from U.S. tax
While corporations do operate in foreing countries these doesn't necessary generate deferred taxes. Difference arise when the company uses a different method in his accounting than the State to determinate the tax basis.
Answer:
January 1, Year 1 Cash $56017.5 Dr
Discount on Bonds Payable $1732.5 Dr
Bonds Payable $57750 Cr
Explanation:
The value of bonds which are issued at par is denoted by 100. If the bonds are issued at anything above 100 denomination, this means that the bonds are issued at a premium and if the denoted figure is less than 100, like in this question it is 97, the bonds are issued at a discount.
The cash received on the issuance of this bond will be 97% of the face value of the bond and the 3% will be the discount on the issuance of these bonds.
Thus, the cash received is = 57750 * 97% = $56017.5
The discount on Bonds Payable = 57750 - 56017.5 = $1732.5
The journal entry to record the bond issuance and the receipt of cash would be:
Date Account title Debit Credit
Year 1 Cash $56,017.5
Discount on Bonds Payable $1, 732.5 Dr
Bonds Payable $57, 750 Cr
Since the bonds were issued at 97, this means they were issued at a discount. The discount on bonds payable is the difference between the face value and the issue price.
Issue Price = $57,750 x 97%
= $56,017.50
Bond Discount = $57,750 - $56,017.50
= $1,732.50
The journal entry to record the issuance of the bonds on January 1, Year 1, would include:
Debit Cash for the amount received ($56,017.50).
Debit Discount on Bonds Payable for the discount amount ($1,732.50).
Credit Bonds Payable for the face value of the bonds ($57,750).
This entry reflects the receipt of cash and the creation of a liability for the face value of the bonds. The discount account represents the additional interest expense that will be recognized over the life of the bonds.
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Answer:
10.20%
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
where.
The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.
So, the market risk premium would be
= Average annual return - average annual t-bill yield
= 15.8% - 5.6%
= 10.20%
Answer:
manufacturing overhead rate =$12.78
Explanation:
Giving the following information:
Butler Manufacturing estimated that:
Manufacturing overhead $176,400
Direct labor hour 13,800.
Actual results for the year:
The actual manufacturing overhead costs $185,000.
Actual direct labor hours 14,600.
We need to calculate the predetermined manufacturing overhead rate per direct hour
manufacturing overhead rate = 176400/13800hours= $12.78
Answer:
The amount of dividend is $20,000.
Explanation:
Calculate the dividend on common stock using the equation as follows:
Dividend = Dividend Declared - (Number of Preferred shares * parvalue)*5%
=$45,000−(5,000×$100×5%)
=$45,000−$25,000
=$20,000
Answer:
This depends on the type of interest charged and the length of the loan. Generally speaking, floating loans should adjust semi-automatically to changes in interest rates. So any change affects them directly.
On the other hand, fixed rate loans, most mortgages and installment loans generally carry a fixed interest rate that doesn't depend on the market interest rate. Some mortgages (around 33% of total) are variable rate mortgages that are affected by changes in the market interest rate, but they adjust on a yearly basis.