In the First Two Years of Operations, a Company Reports

question 74

Essay

In the first two years of operations, a company reports taxable income of $125,000 and $165,000, respectively. In the first two years, the tax rates were 44% and 48% respectively. It is now the end of the third year, and the company has a loss of $260,000 for tax purposes. The company carries losses to the earliest year possible. The tax rate is currently 25%.
Required:
a. How much tax was paid in year 1 and year 2?
b. Compute the amount of income tax payable or receivable in the current (third)year.

Recognize the factors affecting the cost of home insurance.

Analyze decision-making processes related to reporting minor vehicle incidents to insurance companies.

Explain the primary factors that influence the cost of auto insurance premiums.

Know the factors influencing the decision between renting and buying.

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Definitions:

Automobile Industry

A global sector that involves the design, development, manufacturing, marketing, and selling of motor vehicles.

Food Industry

The sector that covers the processing, preparation, and distribution of food products from agricultural production to consumers.

Total Revenue

The total income generated by a company from its business activities before any expenses are subtracted.

Recession

A period of significant economic decline spread across the economy lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.