Questions from Intermediate Accounting

Q: Shannon Polymers uses straight-line depreciation for financial reporting purposes for

Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $800,000 and with an expected useful life of four years and no residual value. Assume that, for...

Q: At the end of 2021, Barker Corporation’s preliminary trial balance indicated

At the end of 2021, Barker Corporation’s preliminary trial balance indicated a current ratio of 1.2. Management is contemplating paying some of its accounts payable balance before the end of the fisca...

Q: J-Matt, Inc., had pretax accounting income of $

J-Matt, Inc., had pretax accounting income of $291,000 and taxable income of $300,000 in 2021. The only difference between accounting and taxable income is estimated product warranty costs of $9,000 f...

Q: Superior Developers sells lots for residential development. When lots are sold

Superior Developers sells lots for residential development. When lots are sold, Superior recognizes income for financial reporting purposes in the year of the sale. For some lots, Superior recognizes...

Q: During its first year of operations, Nive.com reported a

During its first year of operations, Nive.com reported a net operating loss of $15 million for financial reporting and tax purposes. The enacted tax rate is 25%. Prepare the journal entry to recognize...

Q: Insure Corporation reported a net operating loss of $25 million for

Insure Corporation reported a net operating loss of $25 million for financial reporting and tax purposes. Taxable income last year and the previous year, respectively, was $20 million and $15 million....

Q: First Bank has some questions as to the tax-free nature

First Bank has some questions as to the tax-free nature of $5 million of governmental bonds held in its investment portfolio. This amount is excluded from First Bank’s taxable income of $55 million. M...

Q: Milo Manufacturing uses straight-line depreciation for financial statement reporting and

Milo Manufacturing uses straight-line depreciation for financial statement reporting and is able to deduct 100% of the cost of equipment in the year the equipment is purchased for tax purposes. Four y...

Q: A company reports pretax accounting income of $10 million, but

A company reports pretax accounting income of $10 million, but because of a single temporary difference, taxable income is $12 million. No temporary differences existed at the beginning of the year, a...

Q: In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy

In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy...