Question

In: Finance

Martin Oil and Gas Inc was formed right after the 2012 presidential elections. The company did...

  1. Martin Oil and Gas Inc was formed right after the 2012 presidential elections. The company did not fare well for the five years, but finally turned around in the sixth year of operations. Rocco’s operating income (EBIT) for its first six years of operations is reported below.
    Year EBIT
    2013 -$300,000
    2014 -$250,000
    2015 -$200,000
    2016 -$150,000
    2017 -$100,000
    2018 $1,500,000

      
    The company follows a very conservative approach and hence does not carry any debt in its book, hence its operating income equals earnings before taxes. The corporate tax rate has remained constant at 30%. Assume that the company took full advantage of the carry-back, and carry-forward provisions in the Tax Code, and assume that the current provisions were applicable in 2013 through 2018. How much tax did the company pay in 2018?
    a

    $200,000

    b

    $175,000

    c

    $375,000

    d

    $150,000

    e

    $450,000

Solutions

Expert Solution

THERE ARE 2 METHODS OF SOLVING THE QUESTION. BOTH ARE EXPLAINED


Related Solutions

Why did Putin change the electoral system relating to presidential elections in Russia?
Why did Putin change the electoral system relating to presidential elections in Russia?
Tamarisk Gas Inc., an oil and gas company had the following information on its financial statements...
Tamarisk Gas Inc., an oil and gas company had the following information on its financial statements for the fiscal years ended December 31. All figures are in millions of dollars. 2021 2020 2019 2018 Total assets $9,510 $6,380 $2,997 $2,763 Total liabilities 5,842 2,697 2,169 1,684 Profit 1,390 461 35 285 Interest expense 109 74 58 50 Income tax expense (recovery) 603 222 (25) 178 A) Calculate Tamarisk’s (Round answers to 1 decimal place, e.g. 52.7 or 52.7%.) (1) Debt...
Zaxxone Oil Company, Inc., headquartered in Mobile, Alabama, is a multinational corporation with 2012 annual profits...
Zaxxone Oil Company, Inc., headquartered in Mobile, Alabama, is a multinational corporation with 2012 annual profits of $45 billion. Zaxxone has 12 board members who serve the company on a part-time basis, with each board member receiving an average of $300,000 per year in compensation. Emily Chanel, a pre-law student at the University of Alabama in Mobile, is quite familiar with Zaxxone, and she has studied her business law textbook material on corporations and their directors, officers, and shareholders very...
Assume that it is now January 1, 2012. Wayne-Martin Electric Inc. (WME) has developed a solar...
Assume that it is now January 1, 2012. Wayne-Martin Electric Inc. (WME) has developed a solar panel capable of generating 200% more electricity than any other solar panel currently on the market. As a result, WME is expected to experience a 15% annual growth rate for the next 5 years. Other firms will have developed comparable technology at the end of 5 years, and WME growth rate will slow to 5% per year indefinitely. Stockholders require a return of 12%...
Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided...
Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $36,500 and $30,300 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:1. The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $520,000, for a net income of $148,000. Note: The reduction in members’ equity from withdrawals would be disclosed on the statement of members’ equity. Required: A....
Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided...
Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $38,100 and $29,100 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:1. The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $520,000, for a net income of $148,000. Note: The reduction in members’ equity from withdrawals would be disclosed on the statement of members’ equity. Required: A....
Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided...
Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $61,000 and $49000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:2 . The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $52,000,for a net income of s148,000. a. Determine the division of $148,000 net income for the year. b. Provide journal entries to close the (1)...
"An oil and gas company is considering whether to begin drilling a new oil field. The...
"An oil and gas company is considering whether to begin drilling a new oil field. The company will need to pay $4.6 million as an initial investment in order to extract the oil. The company will operate the field for a total of 5 years, during which its annual profit will be $3,344,000. During the 6th year, the company will not operate or gain any revenue from the oil field, but it will need to pay $8,990,000 in environmental remediation...
Dividing LLC Income Martin Farley and Ashley Clark formed a limited liability company with an operating...
Dividing LLC Income Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $66,000 and $53,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:5. The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $520,000, for a net income of $148,000. a. Determine the division of $148,000 net income for the year. Schedule of Division of Net...
Dividing LLC Income Martin Farley and Ashley Clark formed a limited liability company with an operating...
Dividing LLC Income Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $57,000 and $46,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:5. The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $520,000, for a net income of $148,000. a. Determine the division of $148,000 net income for the year. Schedule of Division of Net...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT