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ACC 423 Week 3 Individual Assignment

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ACC 423 Week 3 Individual Assignment No net deferred tax asset (i.e., deferred tax asset net of related valuation allowance) was recognized in the year 2 financial statements by the Chaise Company when a loss from discontinued segments was carried forward for tax purposes because it was more likely than not that none of this deferred tax asset would be realized. Chaise had no temporary differences. The tax benefit of the loss carried forward reduced current taxes payable on year 3 continuing operations. The year 3 income statement would include the tax benefit from the loss brought forward in Income from continuing operations. Gain or loss from discontinued segments. Extraordinary gains. Cumulative effect of accounting changes. Ajax Corp. has an effective tax rate of 30%. On January 1, year 2, Ajax purchased equipment for $100,000. The equipment has a useful life of 10 years. What amount of current tax benefit will Ajax realize during year 2 by using the 150% declining balance method of depreciation for tax purposes instead of the straight-line method? $1,500 $3,000 $4,500 $5,000 Nala Inc. reported deferred tax assets and deferred tax liabilities at the end of year 3 and at the end of year 4. For the year ended year 4 Nala should report deferred income tax expense or benefit equal to the Sum of the net changes in deferred tax assets and deferred tax liabilities. Decrease in the deferred tax assets. Increase in the deferred tax liabilities. Amount of the income tax liability plus the sum of the net changes in deferred tax assets and deferred tax liabilities. HG, Inc., a calendar year corporation, reported the following operating income (loss) before income tax and the enacted tax rates for the last three years of operations: Income Tax rate Year 2 $ 100,000 40% Year 3 $ (300,000) 30% Year 4 $ 400,000 30% There are no permanent or temporary differences between operating income (loss) for financial and income tax reporting purposes. When filing its year 3 tax return, HG did not forego to carryback the year 3 loss. What amount should HG record in year 3 to account for the income tax refund receivable? $0 $40,000 $30,000 $120,000 North, Inc. uses the equity method of accounting for its 50% investment in Mill Corp.’s common stock. During year 3, Mill reported earnings of $600,000 and paid dividends of $200,000. Assume that: (1) all undistributed earnings of Mill will be distributed as dividends in future periods, (2) the dividends received from Mill are eligible for the 80% dividends received deduction, and (3) North’s income tax rate is 30%. The change in the amount of deferred income tax to be reported by North for year 3 is $0 $12,000 $24,000 $60,000 For its first year of operations, Cable Corp. recorded a $100,000 expense in its tax return that will not be recorded in its accounting records until next year. There were no other differences between its taxable and financial statement income. Cable’s effective tax rate for the current year is 45%, but a 40% rate has already been passed into law for next year. In its year-end balance sheet, what amount should Cable report as a deferred tax asset (liability)? $40,000 asset. $40,000 liability. $45,000 asset. $45,000 liability. Sandy Inc. prepares financial statements under IFRS. At December 31, year 4, Sandy’s income for financial (book) purposes equaled $100,000 and Sandy’s only temporary difference related to depreciation. For financial (book) purposes, depreciation equaled $10,000 and for tax purposes, depreciation equaled $15,000. The difference is expected to reverse evenly over the next two years. The enacted tax rate for year 4 is 30% and the substantially enacted tax rate for year 4 and thereafter is 40%. In its year-end balance sheet, what amount should Sand

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