Reference no: EM13551075

Monforte Inc. began operations in January 2015. For certain of its property sales, Monforte recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Monforte recognizes income when it collects cash from the buyer's installment payments.
In 2015, Monforte had $520,000 in sales of this type. Scheduled collections for these sales are as follows:

2015: $52,000

2016: 104,000

2017: 104,000

2018: 130,000

2019: 130,000

520,000

Assume that Monforte has a 35% income tax rate and that there were no other differences in income for financial statement and tax purposes.

Monforte Inc. will report in its year-end 2015 balance sheet:


Question 2
For its first year of operations Asturiana Corporation's reconciliation of pretax accounting income to taxable income is as follows:

Pretax Financial Income

$ 720,000

Permanent Difference

(36,000)



684,000

Temporary Difference

(depreciation)

(48,000)

Taxable Income

$ 636,000


Asturiana's tax rate is 40%. Assume that no estimated taxes have been paid.

What should Asturiana report at the end of its first year of operations?




Question 3
Pinzon Corp. reported the following pretax financial income and taxable income for its first three years of operations:

2015: $490,000.
2016: $(840,000).
2017: $980,000.
Pinzon's tax rate is 30% for all years. Pinzon elected a loss carryback. Pinzon was certain it would recover the full tax benefit of the NOL (Net Operating Loss).

What would be the net loss in 2016 reported in Pinzon's income statement?

Question 4
Encinasola Corp. had taxable income of $73,600 in the current year. The amount of MACRS depreciation was $27,600 while the amount of depreciation reported in the income statement was $9,200. Assuming no other differences between tax and accounting income, Encinasola's pretax financial income was:


Question 5
10 out of 10 points
Which of the following circumstances creates a Deferred Tax Asset?

Question 6
Pinzon Corp. reported the following pretax financial income and taxable income for its first three years of operations:

2015: $490,000.
2016: $(840,000).
2017: $980,000.
Pinzon's tax rate is 30% for all years. Pinzon elected a loss carryback. Pinzon was certain it would recover the full tax benefit of the NOL (Net Operating Loss).

What did it report on December 31, 2016, as the deferred tax asset for the NOL carryforward?

Question 7
For its first year of operations Asturiana Corporation's reconciliation of pretax accounting income to taxable income is as follows:

Pretax Financial Income

$ 720,000

Permanent Difference

(36,000)



684,000

Temporary Difference

(depreciation)

(48,000)

Taxable Income

$ 636,000


Asturiana's tax rate is 40%. Assume that no estimated taxes have been paid.

What should Asturiana report as income tax payable for its first year of operations?


Question 8
For its first year of operations Asturiana Corporation's reconciliation of pretax accounting income to taxable income is as follows:

Pretax Financial Income

$ 720,000

Permanent Difference

(36,000)



684,000

Temporary Difference

(depreciation)

(48,000)

Taxable Income

$ 636,000


Asturiana's tax rate is 40%. Assume that no estimated taxes have been paid.

What should Asturiana report as its income tax expense for its first year of operations?




Question 9
Monforte Inc. began operations in January 2015. For certain of its property sales, Monforte recognizes income in the period of sale for financial reporting purposes. However, for income tax purposes, Monforte recognizes income when it collects cash from the buyer's installment payments.
In 2015, Monforte had $520,000 in sales of this type. Scheduled collections for these sales are as follows:

2015: $52,000

2016: 104,000

2017: 104,000

2018: 130,000

2019: 130,000

520,000

Assume that Monforte has a 35% income tax rate and that there were no other differences in income for financial statement and tax purposes.

Monforte Inc. will report in its year-end 2016 balance sheet:


Question 10
For the current year, Cortegana Corp. had $216,000 in pretax financial income. This included bad debt expense of $16,200 based on the allowance method, and $46,000 in depreciation expense. $4,600 in receivables were written off as uncollectible, and MACRS depreciation amounted to $80,500. In the absence of other temporary or permanent differences, what was Cortegana's income tax payable currently, assuming a tax rate of 40%?