Amelia, Inc

question 75

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


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. Determine the change in Amelia's deferred tax assets for the current year.

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Definitions:

Year 0 Value

Year 0 Value is a reference point in financial analysis indicating the value of an investment or project at the beginning period before any growth or decline.

Weighted Average

Weighted average is a calculation that takes into account the varying degrees of importance of the numbers in a data set.

Free Cash Flows

The amount of cash generated by a business that is available for distribution to its securities holders after capital expenditures.

Year 0 Value

A reference to the initial value or investment amount at the beginning of a project or investment period, often used in financial analysis.