Question
In: Accounting
What is the justification for a corporation determining income for financial reporting purposes differently than the...
What is the justification for a corporation determining income for financial reporting purposes differently than the way it is determined for tax purposes?
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Expert Solution
Solution:
What is the justification for a corporation determining income for financial reporting purposes differently than the way it is determined for tax purposes?
The main reason for forming a corporation is to limit the liability of the owners. In a sole proprietorship or partnership, the owners are personally liable for the debts and liabilities of the business, and in many instances, creditors can go after their personal assets to collect business debts.
When all is said in done pay for money related revealing reason pursue accumulation premise where as pay for duty purposes Use cash premise.
In the event that expense premise bookkeeping is utilized for monetary announcing reason the proprietors or say the investors may get miss leaded when for instance there are no money accumulations in multi year or aggregate money accumulations of past and current year in a single year.
So accumulation premise of bookkeeping is utilized for budgetary detailing reason with the goal that we can convey the real aftereffects of tasks.
The duty premise of bookkeeping is readied in light of the fact that according to the rules of IRS or expense specialist in your particular Country it must be utilized for filling returns.
ekkarill92 answered 1 year agoRelated Solutions
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Ayayai Inc. reports the following pretax income (loss) for both
financial reporting purposes and tax purposes. (Assume the
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Year
Pretax Income (Loss)
Tax Rate
2015
123,000
34%
2016
86,000
34%
2017
(278,000)
38%
2018
237,000
38%
Prepare the journal entries for the years 2015–2018 to record
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and the tax effects of the loss carryback and carryforward,
assuming that at the end of...
Tamarisk Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes....
Tamarisk Inc. reports the following pretax income (loss) for
both financial reporting purposes and tax purposes.
Year
Pretax Income
(Loss)
Tax Rate
2018
$128,000
17
%
2019
118,000
17
%
2020
(290,000)
19
%
2021
306,000
19
%
The tax rates listed were all enacted by the beginning of
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a) Prepare the journal entries for the years 2018–2021 to record
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financial reporting purposes and tax purposes.
Year
Pretax Income
(Loss)
Tax Rate
2018
$125,000
17
%
2019
95,000
17
%
2020
(230,000
19
%
2021
301,000
19
%
The tax rates listed were all enacted by the beginning of 2018.
1. Prepare the journal entries for the years 2018–2021 to record
income tax expense (benefit) and income taxes payable (refundable)
and the tax effects of the loss carryforward, assuming that...
Bramble Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes....
Bramble Inc. reports the following pretax income (loss) for both
financial reporting purposes and tax purposes.
Year
Pretax Income
(Loss)
Tax Rate
2018
$117,000
17
%
2019
114,000
17
%
2020
(228,000
)
19
%
2021
307,000
19
%
The tax rates listed were all enacted by the beginning of 2018.
Prepare the journal entries for the years 2018–2021 to record
income tax expense (benefit) and income taxes payable (refundable)
and the tax effects of the loss carryforward, assuming that...
Nash Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes....
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financial reporting purposes and tax purposes. (Assume the
carryback provision is used for a net operating loss.)
Year
Pretax Income
(Loss)
Tax Rate
2015
$127,000
34
%
2016
93,000
34
%
2017
(284,000
)
38
%
2018
237,000
38
%
The tax rates listed were all enacted by the beginning of 2015.
(a)
Prepare the journal entries for the years 2015–2018 to record
income tax expense (benefit) and income taxes...
Tamarisk Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes....
Tamarisk Inc. reports the following pretax income (loss) for
both financial reporting purposes and tax purposes. Year Pretax
Income (Loss) Tax Rate 2018 $128,000 17 % 2019 118,000 17 % 2020
(290,000 ) 19 % 2021 306,000 19 % The tax rates listed were all
enacted by the beginning of 2018. Collapse question part
(a) Prepare the journal entries for the years 2018–2021 to
record income tax expense (benefit) and income taxes payable
(refundable) and the tax effects of the...
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What justification is there for valuing equity securities at fair value and reporting the unrealized gain or loss as part of net income?
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