Amelia, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year.Assume a 34% corporate tax rate and no valuation allowance.
Assets Cash Accounts Receivable Buildings Accumulated Depreciation Furniture & Fixtures Accumulated Depreciation Total Assets Liabilities Accrued Vacation Pay Note Payable Total Liabilities Paid in Capital Retained Earnings Total Liabilities and Stockholders’ Equity Tax Debit/(Credit) $1,20020,0001,200,000(600,000)160,000(84,000)$697,200$−0−(464,000)($464,000)($4,000)(229,200)($697,200)Book Debit/(Credit) $1,20020,0001,200,000(320,000)160,000(60,000)$1,001,200($108,000)(464,000)($572,000)($4,000)(425,200)($1,001,200)
Amelia, Inc.’s, gross deferred tax assets and liabilities at the beginning of Amelia’s year are listed below.
Accrued Vacation Pay Subtotal Applicable Tax Rate Gross Deferred Tax Asset Building -Accumulated DepreciationFurniture & fixtures -Accumulated DepreciationSubtotalApplicable tax rate Gross deferred tax liability Beginning of Year $84,000$84,000×34%$28,560($244,000)(12,800)($256,800)×34%($87,312)
Amelia, Inc.’s, book income before tax is $25,200. Amelia records two permanent book-tax differences.
It earned $1,000 in tax-exempt municipal bond interest and $1,840 in nondeductible meals and
entertainment expense. What is Amelia’s total provision for income tax expense reported on its
financial statement and its book net income after tax?
Definitions:
Middle Managers
Individuals in an organization who manage the work of subordinate employees and report to a higher manager.
Middle Managers
Individuals within an organization who manage at a level below top leadership but above frontline employees, responsible for implementing the company's strategies and policies.
Self-Interests
Actions or decisions guided by personal benefit, gain, or interest, often without regard for others.
Strategies
Broad plans or sets of actions designed to achieve specific goals or outcomes within an organization or individual endeavor.