Question 51. (LO 2) Shaw Corporation reported pre-tax book income of $

51. (LO 2) Shaw Corporation reported pre-tax book income of $1,000,000. Included in the computation were favorable temporary differences of $200,000, unfavorable temporary differences of $50,000, and favorable permanent differences of $100,000. Assuming a tax rate of 34%, compute the company’s deferred income tax expense or benefit.

52. (LO 2) Shaw, Inc. reported pre-tax book income of $10,000,000. During the current year, the reserve for bad debts increased by $100,000. In addition, tax depreciation exceeded book depreciation by $200,000. Shaw, Inc. sold a fixed asset and reported book gain of $50,000 and tax gain of $75,000. Finally, the company received $250,000 of tax-exempt life insurance proceeds from the death of one of its officers. Assuming a tax rate of 34%, compute the company’s deferred income tax expense or benefit.

53. (LO 2) Harrison Corporation reported pre-tax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In addition, the company received $300,000 of tax-exempt municipal bond interest. The company’s prior year tax return showed taxable income of $50,000. Assuming a tax rate of 34%, compute the company’s deferred income tax expense or benefit.

54. (LO 2) Identify the following items as creating a temporary difference, permanent difference, or no difference.

55. (LO 2) Which of the following items is not a permanent book/tax difference?

a. Tax-exempt interest income

b. Tax-exempt insurance proceeds

c. Domestic production activities deduction

d. Non-deductible meals and entertainment expense

e. First-year expensing under §179

56. (LO 2) Ann Corporation reported pre-tax book income of $1,000,000. Included in the computation were favorable temporary differences of $200,000, unfavorable temporary differences of $50,000, and favorable permanent differences of $100,000. Compute the Company’s book equivalent of taxable income. Use this number to compute the Company’s total income tax provision or benefit, assuming a tax rate of 34%.

57. (LO 2) Burcham Corporation reported pre-tax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In addition, the Company received $300,000 of tax-exempt municipal bond interest. The Company’s prior year tax return showed taxable income of $50,000. Compute the Company’s book equivalent of taxable income. Use this number to compute the Company’s total income tax provision or benefit, assuming a tax rate of 34%.

58. (LO 3) Adams Corporation has total deferred tax assets of $3,000,000 at year-end. Management is assessing whether a valuation allowance must be recorded against some or all of the deferred tax assets. What level of assurance must management have, based on the weight of available evidence, that some or all of the deferred tax assets will not be realized before a valuation allowance is required?

a. Probable

b. More likely than not

c. Realistic possibility

d. Reasonable

e. More than remote

59. (LO 3) Which of the following evidence would not be considered positive in determining whether Adams Corporation needs to record a valuation allowance for some or all of its deferred tax assets?

a. The Company forecasts future taxable income because of its backlog of orders

b. The Company has unfavorable temporary differences that will create future .taxable income when they reverse.

c. The Company has tax planning strategies that it can implement to create future taxable income.

d. The Company has cumulative net income over the current and prior two years.

e. The Company had a net operating loss carryover expire in the current year.

60. (LO 3) As of the beginning of the year, Gratiot Company recorded a valuation allowance of $200,000 against its deferred tax assets of $1,000,000. The valuation allowance relates to a net operating loss carryover from the prior year. During the year, management concludes that the valuation allowance is no longer necessary because it forecasts sufficient taxable income to absorb the NOL carryover. What is the impact of management’s reversal of the valuation allowance on the company’s effective tax rate?

a. Increases the ETR

b. Decreases the ETR

c. No impact on the ETR

Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.