Amelia, Inc Amelia, Inc Amelia, Inc

question 21

Essay

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.

$\begin{array}{lcc}&\text { Tax Debit/(Credit) }&\text {Book Debit/(Credit) }\\\text { Assets }\\\text { Cash } & \$ 1,200 & \$ 1,200 \\\text { Accounts Receivable } & 20,000 & 20,000 \\\text { Buildings } & 1,200,000 & 1,200,000 \\\quad \text { Accumulated Depreciation } & (600,000) & (320,000) \\\text { Furniture \& Fixtures } & 160,000 & 160,000 \\\quad \text { Accumulated Depreciation } & \underline{(84,000)} & \underline{(60,000)} \\\text { Total Assets } & \underline{\underline{\$ 697,200}} & \underline{\underline{\$ 1,001,200}}\\\\\text { Liabilities }\\\text { Accrued Vacation Pay } & \$-0- & (\$ 108,000) \\\text { Note Payable } & \underline{(464,000)}& \underline{(464,000) }\\\text { Total Liabilities } & \underline{(\$ 464,000)} & \underline{(\$ 572,000)}\\\\\text { Paid in Capital } & (\$ 4,000) & (\$ 4,000) \\\text { Retained Earnings } & \underline{(229,200)} & \underline{(425,200)} \\\text { Total Liabilities and } \text { Stockholders' Equity } & \underline{ \underline{(\$ 697,200)}} & \underline{\underline{(\$ 1,001,200)}} \\\end{array}$

Amelia, Inc.’s, gross deferred tax assets and liabilities at the beginning of Amelia’s year are listed below.
$\begin{array}{lr}&\text { Beginning of Year }\\\text { Accrued Vacation Pay } & \$ 84,000 \\\text { Subtotal } & \$ 84,000 \\\text { Applicable Tax Rate } & \times 34 \% \\\text { Gross Deferred Tax Asset } & \underline{\$ 28,560}\\\\\text {Building -}&(\$ 244,000) \\\text {Accumulated Depreciation}\\\text {Furniture \& fixtures -}\\\text {Accumulated Depreciation}&(12,800) \\\text {Subtotal}&(\$256,800)\\\text {Applicable tax rate}&\underline{\times34\%}\\\text { Gross deferred tax liability}&\underline{(\$87,312)}\end{array}$

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:

Black Faces

In psychological studies, this term often refers to the use of images of faces of African or African American individuals in research on racial bias and perception.

Implicit Association Test (IAT)

A psychological test designed to uncover the strength of a person's automatic association between mental representations of objects or concepts.

Unconscious Level

A part of the mind that is inaccessible to the conscious mind but affects behavior and emotions.

Prejudices

Preconceived opinions or judgments about individuals or groups without sufficient knowledge, often based on stereotypes.