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GalinKa [24]
3 years ago
9

At the end of its first year of operations, Eagle Manufacturing has a deductible temporary difference of $100,000. Eagle has inc

ome taxes payable of $90,000 due to a tax rate of 20%. Eagle also recorded a deferred tax asset. Later, they determined that it is more likely than not that $15,000 of the deferred tax asset will not be realized. What entry should Eagle make to record the reduction in asset value?
Business
1 answer:
Sunny_sXe [5.5K]3 years ago
3 0

Complete question:

At the end of its first year of operations, Eagle Manufacturing has a deductible temporary difference of $100,000. Eagle has income taxes payable of $90,000 due to a tax rate of 20%. Eagle also recorded a deferred tax asset. Later, they determined that it is more likely than not that $15,000 of the deferred tax asset will not be realized. What entry should Eagle make to record the reduction in asset value?

A. Allowance to Reduce Deferred

Tax Asset to Expected Realizable

Value 15,000

Income Tax Expense 15,000

B. Income Tax Expense 15,000

Deferred Tax Asset 15,000

C. Income Taxes Payable 15,000

Income Tax Expense 15,000

D. Income Tax Expense 15,000

Allowance to Reduce Deferred

Tax Asset to Expected Realizable

Value 15,000

Answer:

Income Tax Expense = 15,000

Allowance to Reduce Deferred

Tax Asset to Expected Realizable

Value 15,000

Explanation:

A book value decrease decreases the valuation of the book asset when changes in the asset or the dynamics of the market have decreased its present market value.

Reduction of book value is a non-cash charge listed as an expense, which decreases net profit.

In this case , Option D entry should Eagle make to record the reduction in asset value

i.e,  Income Tax Expense                                        15,000

                     Allowance to Reduce Deferred

                     Tax Asset to Expected Realisable

        Value                                                                  15,000

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Answer:

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Explanation:

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Value = Number × Price

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Total value = $140,000,000+ $13,500,000 + $19,600,000

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Weight of common stock = Respective Value ÷ Total Value

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Weight of preferred stock = Respective Value ÷ Total Value

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7 0
2 years ago
The CPI of a country in October is given to be 210. In November, the CPI rises to 220. What is the rate of inflation from Octobe
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The rate of inflation is 4.8%.

Given that,

  • The CPI of a country in October is given to be 210. In November, the CPI rises to 220.

Based on the above information, the calculation is as follows:

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3 years ago
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Answer and Explanation:

The journal entries are shown below:

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        To Revenue $1,250

(Being the revenue of three month is recorded)

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(Being the advertising expense is recorded)

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(Being the salary expense is recorded)

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Answer:

$6,621.25

Explanation:

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Second step is to calculate the three parts of the salesperson's commission

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Second part

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Third step is to calculate the agent 50% commission that is left

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Agent commission=$7,742.50 * 50%

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Sales associate's total compensation= $6,621.25

Therefore Sales associate's total compensation is $6,621.25

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