CHAPTER 16- ACCOUNTING FOR INCOME TAX

PROBLEM 16-14
ANSWER: C. 1,770,000
SOLUTION
Financial Income 6,200,000
Interest revenue on Gov’t bonds (200,000)
Tax depreciation in excess of financial depreciation (100,000)
(600,000-500,000)
Taxable Income 5,900,000

Current Tax expense (30%x 5,900,000) 1,770,000

PROBLEM 16-15
ANSWER: C. 1,650,000
SOLUTION
Accounting for financial income per book 6,000,000
Interest revenue on Gov’t bonds (500,000)
Accounting or financial income subject to tax 5,500,000

Total income tax expense (30%x5,500,000) 1,650,000

PROBLEM 16-16
ANSWER: A. 111,000
SOLUTION
Pre tax income 400,000
Payment of penalty per book 15,000
415,000
Less :40,000-20,000 (20,000)
Less: 125,000-100,000 (25,000)
370,000

(370,000x30%) 111,000
PROBLEM 16-17
ANSWER: C. 50,000
SOLUTION
Pre tax income 800,000
Nontaxable gain (350,000)
450,000
Less: Depreciation deducted for tax purposes (50,000)
400,000

400,000x30% 120,000
Estimated tax payment during the current year (70,000)
Current Tax liability 50,000
PROBLEM 16-18
ANSWER: A. 45,000
SOLUTION
Current Provision (150,000x 30%) 45,000