Business, 06.04.2020 17:01 AnonymousLizard52303
Burger King is a cash-basis taxpayer but maintains its financial accounting records using full
accrual accounting. In the current year, the company sold a parcel of land resulting in a gain of
$10,000. However, the receivable will not be collected until next year at which time the gain will
be taxed.
Federal income tax law specifies a ‘graduated’ tax structure as follows:
The first $20,000 of income is taxed at a rate of 10%.
All income above $20,000 is taxed at a rate of 20%.
During the current year, Burger King had taxable income of $38,000. Next year, Burger King
anticipates that taxable income (after including the $10,000 gain) will be approximately $40,000.
Question
What tax rate should Burger King use in measuring (recording) deferred taxes on the $10,000
gain?
Required
1. Provide a brief written description of the proper tax rate to use in measuring deferred tax
expense for the current year.
Facts
Burger King is a cash-basis taxpayer but maintains its financial accounting records using full
accrual accounting. In the current year, the company sold a parcel of land resulting in a gain of
$10,000. However, the receivable will not be collected until next year at which time the gain will
be taxed.
Federal income tax law specifies a ‘graduated’ tax structure as follows:
The first $20,000 of income is taxed at a rate of 10%.
All income above $20,000 is taxed at a rate of 20%.
During the current year, Burger King had taxable income of $38,000. Next year, Burger King
anticipates that taxable income (after including the $10,000 gain) will be approximately $40,000.
Question
What tax rate should Burger King use in measuring (recording) deferred taxes on the $10,000
gain?
Required
1. Provide a brief written description of the proper tax rate to use in measuring deferred tax
expense for the current year.
Answers: 1
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Frugala is when sylvestor puts $2,000 into 10-year state bonds and $3,000 into 5-year aaa-rated bonds in steady hand hardware, inc. he buys the four state bonds at a 5 percent interest rate and the three steady hand bonds at a 6.5 percent rate. sylvestor also buys $1,500 worth of blue chip stocks, and $800 worth of stock in a promising new sportswear company that reinvests its earnings in new growth. 1. (a) what is the maturity for each of the bond groups sylvestor buys? (b) the coupon rate? (c) the par value?
Answers: 3
Burger King is a cash-basis taxpayer but maintains its financial accounting records using full
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