What is the journal entry to record the tax accrual

Assignment Help Financial Management

Reference no: EM131346596

Wingo Inc. which has a 34 percent income tax rate ( also assume this is the applicable tax rate) is considering making a substantial investment in marketable securities that will generate annual income of $400,000. Analyze each of the following four scenarios:

a. The income is from tax-exempt bonds and Wingo will pay regular income tax but no AMT

b. the income is from devidends on publicly traded stock eligible for the 70 percent dividts received deduction and Wingo will pay regular income tax but no AMT.

c. The income is from tax-exempt bonds and Wingo is in an AMT position and has a positive ACE adjustment before consideration of the interest income.

d. The income is from dividends on publicly traded stock eligible for the 70 percent dividends received deduction and Wingo is in an AMT position and has a positive ACE adjustment before consideration of the interest income.

For each scenario:

- What is Wingo's after tax cash flow?

- How is this income reported for financial and taxable income?

- What is the journal entry to record the tax accrual?

Reference no: EM131346596

Questions Cloud

Under the circumstances when the stock price rises : What is your profit or loss under the following circumstances when the stock price rises? You buy a stock at $15 and simultaneously buy a put. The strike price on the put is $12, and you pay a $5 premium. What is your loss in the following situation?..

Target corp recently earned profit-ratio remained unchanged : Target Corp (TGT) recently earned a profit of $3.57 earnings per share and has a P/E ratio of 17.3. The dividend has been growing at a 14 percent rate over the past few years. If this growth continues, what would be the stock price in five years if t..

Consider the characteristics of the three stocks : Consider the characteristics of the following three stocks: T& Company, Expected Return = 18%; Standard Deviation = 25% A& Company, Expected Return = 12%; If you can pick only two stocks for your portfolio, which would you pick? Why?

Different risk premiums lead to different stock prices : Explain why do different risk premiums lead to different stock prices?

What is the journal entry to record the tax accrual : Wingo Inc. which has a 34 percent income tax rate ( also assume this is the applicable tax rate) is considering making a substantial investment in marketable securities that will generate annual income of $400,000. Analyze each of the following four ..

Using earned value management in projects : Using Earned Value Management in projects, multi-functional control account plans should have:

Dimensions of performance in earned value project management : The three dimensions of performance in Earned Value Project Management are:

Beta of the stock-expected return on market : A share of stock sells for $51 today. The beta of the stock is 1, and the expected return on the market is 10 percent. The stock is expected to pay a dividend of $1 in one year. If the risk-free rate is 4.5 percent, what will the share price be in on..

What is avicorp pre-tax cost of debt : Avicorp has a $14.5 million debt issue outstanding, with a 6.1% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 93% of par value. What is? Avicorp's pr..

User Account

All Pages