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Masja [62]
2 years ago
11

The difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine subscrip

tions being reported for tax purposes in the year received, but reported in the income statement in later years when the performance obligation is satisfied. The income tax rate is 25% each year. Times-Roman anticipates profitable operations in the future.
Business
1 answer:
Aleks04 [339]2 years ago
7 0

Question Completion:

Times-Roman Publishing Company reports the following amounts in its first three years of operation: ($ in 000s) Pretax accounting income Taxable income 2018 2019 2020 S340 $320 $310 380 330 350

Required:

1. What is the balance sheet account for which a temporary difference is created by this situation?

2. For each year, indicate the cumulative amount of the temporary difference at year-end. (Enter your answers in thousands.)

3. Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax liability? (Enter your answers in thousands.)

Answer:

Times-Roman Publishing Company

1. The balance sheet account for which a temporary difference is created by this situation is the Deferred Subscription Revenue.

2. Cumulative amount of the temporary difference at year-end:

December 31, ($ in 000s)               2018    2019    2020

Cumulative Temporary Difference $40      $50     $90

3. The balance in the related deferred tax account for each year:

December 31, ($ in 000s)               2018    2019    2020

Deferred Tax Asset (Liability)          $10      $2.5     $10

They are all deferred tax assets.

Explanation:

a) Data and Calculations:

December 31, ($ in 000s)               2018    2019    2020

Pretax accounting income             $340    $320    $310

Taxable income                                380      330      350

Temporary Difference                     $40       $10     $40

Cumulative Temporary Difference $40      $50     $90

Deferred Tax Asset (Liability)          $10      $2.5     $10

a) A deferred tax asset arises from the overpayment or advance payment of taxes as a result of the temporary differences between the accounting income and the taxable income.  On the other hand, a deferred tax liability arises from the underpayment of taxes as a result of the temporary differences between accounting income and taxable income.

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In 2021, the Marion Company purchased land containing a mineral mine for $1,150,000. Additional costs of $448,000 were incurred
babymother [125]

Answer:

Marion Company

a1) Depletion of the Mine for two years:

2018: 41,000/310,000 * $1,488,000 = $196,800

2019: 51,000/397,500 * $1,488,000 = $190,913

a2) Depreciation of Mining Facilities:

2018: 41,000/310,000 *$102,300 = $13,530

2019: 51,000/397,500 * $102,300 = $13,125

a3) Depreciation of Mining Equipment

2018: 41,000/310,000 *$46,500 = $6,150

2018: 51,000/397,500 * $46,500 = $5,966

b) Book Values December 31, 2019:

1) Mineral Mine:

Cost = $1,598,000

Accumulated Depletion $387,713 (2018 & 2019)

Book Value = $1,210,287

b2) Structures:

Cost = $102,300

Accumulated Depreciation $26,655 (2018 & 2019)

Book Value = $75,645

b3) Equipment:

Cost = $51,500

Accumulated Depreciation $12,116

Book Value = $39,384

Explanation:

a) Cost of Mine:

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Development $448,000

Less Resale    ($110,000)

Total cost =  $1,488,000

b) Cost of Facilities or Structure:

Building cost = $102,300

c) Cost of Equipment = $51,500 - $5,000 = $46,500

d) Depletion is an accrual accounting technique used to allocate the cost of extracting natural resources.  It is like depreciation and amortization, which lower the cost value of an asset incrementally through periodic charges to income.

e) Depreciation is an accounting method for allocating the cost (the value used up) of a tangible or physical asset over its useful life.

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Companies that have preferred stock outstanding promise to pay a stated dividend for an infinite period. Preferred stock is trea
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Answer:

$74.63 per share

Explanation:

The computation of the value of preferred stock is shown below:

As we know that  

Value of the preferred stock = Annual dividend rate ÷ Returns on the stock

where,

Dividend on the preferred stock = Dividend rate × Par value

= 11% × $100

= $11

And, the return is 14.74%

So, the value of the preferred stock is  

= $11 ÷ 14.74%

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Suppose the U.S. Treasury offers to sell you a bond for $747.25. No payments will be made until the bond matures 5 years from no
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Answer:

r = 6.00%

Explanation:

given data:

bond price = $747.25

V = \frac{P}{(1+r)^n}

747.25 = \frac{1000}{(1+r)^5}

(1+r)^5= \frac{1000}{747.25}

1.33824  =(1+r)^5

taking log on both side

5 ln (1+r)= ln 1.33824

ln (1+r)= \frac{0.291355477}{5}

ln (1+r) = .05827

1+r =e^{0.05827}

1+r =1.06

r=0.06

r = 6.00%

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3 years ago
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