Amelia, Inc $\text { Amelia, Inc.'s, gross deferred tax assets and liabilities at the beginning of Amelia's year are listed below. }$

question 14

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. $\begin{array}{lrr}&\text { Tax Debit/(Credit) }&\text { Book Debit/(Credit) }\\\text { Assets }\\\text { Cash } & \$ 1,200 & \$ 1,200 \\\text { Accounts Receivable } & 20,000 & 20,000 \\\text { Buildings } & 1,200,000 & 1,200,000 \\\text { Acc. Depreciation } & (600,000) & (320,000) \\\text { Furniture \& Fixtures } & 160,000 & 160,000 \\\text { Acc. Depreciation } & \underline{(84,000)} & (60,000) \\\text { Total Assets } & \$ 697,200 & \$ 1.001 .200\\\text { Liabilities }\\\text { Accrued Vacation Pay } & \$-0- & (\$ 108,000) \\\text { Note Payable } & \underline{(464,000)} & (\$ 464,000) \\\text { Total Liabilities } & \underline{\$464,000)} & \underline{(\$ 572,000)}\\\text { Stockholders' Equity }\\\text { Paid in Capital } & (\$ 4,000) & (\$ 4,000) \\\text { Retained Earnings } & (229,200) & (425,200) \\\text { Total Liabilities and } & \underline{(\$ 697.200)} & (\$ 1.001 .200) \\\end{array}$
$\text { Amelia, Inc.'s, gross deferred tax assets and liabilities at the beginning of Amelia's year are listed below. }$
$\begin{array}{lr}&\text { Beginning of Year }\\\text { Accrued Vacation Pay } & \$ 84,000 \\\text { Subtotal } & \$ 84,000 \\\text { Applicable Tax Rate } & \times 34 \% \\\text { Gross Deferred Tax Asset } & \$ 28,560\\\\\text { Building - Acc. Depreciation } & (\$ 244,000) \\\text { Furniture \& fixtures - Acc. Depreciation } & (12,800) \\\text { Subtotal } & (\$ 256,800) \\\text { Applicable tax rate } & \times \quad 34 \% \\\text { Gross deferred tax liability } & (\$ 87,312)\end{array}$ 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?

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Definitions:

Telecom Services

Services provided by companies that enable communication over distances via telephone, internet, cable, and broadcasting.

Money Center Banks

Large financial institutions that offer a wide range of financial services and are typically located in major economic centers.

ROE

Short for Return on Equity, a measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Money Center Banks

Large financial institutions that offer a wide range of financial services, located in major financial centers and dealing with high volumes of currency transactions.