The Guava Corporation Has Book Net Income of $90,000 for the Current

question 1

Essay

The Guava Corporation has book net income of $90,000 for the current year.Included in this figure are the following items which are reported on the corporation's Schedule M-1, Reconciliation of Income (Loss)per Books with Income per Return.​ 1. Federal income tax expense
2. Depreciation deducted on books, not deductible for tax purposes
3. Deduction for 50 percent of meals expense not allowed for tax purposes
4. Deduction for payroll tax penalties not allowed for tax purposes
5. Tax exempt interest income included in book income but not in tax return income Based on the above information, calculate the Guava Corporation's taxable income for the year.Show your calculations.

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes, have been subtracted from total revenues.

Operating Expenses

Costs associated with running the day-to-day operations of a business, excluding costs related to production or manufacturing.

Advanced Company

A designation often used to describe a business that operates with significant technological advancements or innovative products compared to competitors.

Absorption Costing

Absorption costing is an accounting method that includes all manufacturing costs - direct labor, direct materials, and both variable and fixed manufacturing overhead - in the cost of a product.