The Swirlie Suitcase Co. reported $600,000 financial net income for the year 12/

Question

The Swirlie Suitcase Co. reported $600,000 financial net income for the year 12/31/2015. Consider the following additional information.
Swirlie had a deferred tax asset at the beginning of the year of $10,000. The tax asset is due to an unused carryforward of a previous net operating loss. The Company used accelerated depreciation for tax purposes that resulted in an additional (for 2015) reduced asset basis of $12,000. The $12,000 reduced basis is in additional to any previous year’s reductions. Swirlie owns City of Cleveland bonds that yielded $45,000 interest income. During the year the Company paid $11,000 to repair products sold that was still under warranty. Based on sales for 2015, the Company estimates that an additional warranty expense of $40,000 will be incurred for next year, so they charged warranty expense for the $40,000.
Question to answer: Assuming the tax rate, current and future, is 20%, how much income tax do they owe for 2015?
The Swirlie Suitcase Co. reported $600,000 financial net income for the year 12/31/2015. Consider the following additional information.
Swirlie had a deferred tax asset at the beginning of the year of $10,000. The tax asset is due to an unused carryforward of a previous net operating loss. The Company used accelerated depreciation for tax purposes that resulted in an additional (for 2015) reduced asset basis of $12,000. The $12,000 reduced basis is in additional to any previous year’s reductions. Swirlie owns City of Cleveland bonds that yielded $45,000 interest income. During the year the Company paid $11,000 to repair products sold that was still under warranty. Based on sales for 2015, the Company estimates that an additional warranty expense of $40,000 will be incurred for next year, so they charged warranty expense for the $40,000.
Question to answer: Assuming the tax rate, current and future, is 20%, how much income tax do they owe for 2015?
The Swirlie Suitcase Co. reported $600,000 financial net income for the year 12/31/2015. Consider the following additional information.
Swirlie had a deferred tax asset at the beginning of the year of $10,000. The tax asset is due to an unused carryforward of a previous net operating loss. The Company used accelerated depreciation for tax purposes that resulted in an additional (for 2015) reduced asset basis of $12,000. The $12,000 reduced basis is in additional to any previous year’s reductions. Swirlie owns City of Cleveland bonds that yielded $45,000 interest income. During the year the Company paid $11,000 to repair products sold that was still under warranty. Based on sales for 2015, the Company estimates that an additional warranty expense of $40,000 will be incurred for next year, so they charged warranty expense for the $40,000.
Question to answer: Assuming the tax rate, current and future, is 20%, how much income tax do they owe for 2015?

Explanation / Answer

Taxes owed : 104400

Pretax accounting income 600000 Additional depreciation for tax purpose (12000) Interest income (exempt for tax purpose) 45000 Warranty expense   (taxable on cash basis for tax purpose) 40000 warranty paid (11000) Taxable income 572000 Tax payable [572000*.20] = 114400-10000deferred tax asset 104400

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.