Question

In: Finance

At year end, Jackson, Inc. reported the carrying value of its equipment at $2 million. The...

At year end, Jackson, Inc. reported the carrying value of its equipment at $2 million. The tax base of the equipment was $1.2 million. Assuming a tax rate of 40%, Jackson should report a deferred tax liability of:

Group of answer choices

A) $800,000.

B) $320,000.

C) $480,000.

Solutions

Expert Solution

Actual tax =carrying value of equipment*tax rate=2,000,000*40%=800,000

Tax paid as per the income tax=1,200,000*40%=480,000

The deferred tax liability=800,000-480,000=320,000

Option B is correct

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Southwest Airlines sold flight equipment for $15 million cash at the end of its 7th year...
Southwest Airlines sold flight equipment for $15 million cash at the end of its 7th year of use. The flight equipment originally cost $21 million and was depreciated using the straight-line method with $1 million residual value and a useful life of 20 years. (a) Calculate the amount of depreciation expense recorded at the end of the 7th year to bring depreciation up to date. (b) After updating the depreciation, what is the equipment’s book value at the end of...
In its fiscal 2016 balance sheet, Airways Corporation, reported cash of $443 million at year-end. The...
In its fiscal 2016 balance sheet, Airways Corporation, reported cash of $443 million at year-end. The statement of cash flows reports that cash increased by $115 million during the year and that net cash flow from operating activities was $1,632 million. What was the cash flow from investing activities during the year? A. $533 million cash outflow B. $715 million cash inflow C. $533 million cash inflow D. $715 million cash outflow E. There is not enough information to determine...
On its year-end balance sheet, Hasten Inc., reported cash and cash equivalents at the start of...
On its year-end balance sheet, Hasten Inc., reported cash and cash equivalents at the start of the year of $54,144 thousand. By the end of the year, the cash and cash equivalents had decreased to $51,164 thousand. The company’s statement of cash flows reported cash from operating activities of $311,925 thousand, cash from financing activities of $(230,204) thousand. What amount did the company report for cash from investing activities? Select one: a. $78,741 thousand cash inflow b. $84,701 thousand cash...
Jackson Software, Inc. is an all-equity firm with 2 million shares outstanding, $6 million in earnings...
Jackson Software, Inc. is an all-equity firm with 2 million shares outstanding, $6 million in earnings after taxes, and a market value of $100 million. The firm borrows $25 million at an interest rate of 8% and buys back 500,000 shares with the proceeds. The firm's tax rate is 40%. Management does not want the earnings performance to disappoint shareholders and market analysts. What is the maximum interest rate the firm could pay on its new debt so as not...
As at year ended 31 March 2019, the total carrying value of property, plant and equipment...
As at year ended 31 March 2019, the total carrying value of property, plant and equipment on the statement of financial position of Candy Limited was $720,000. The current assets as at year ended 2019 included interest receivable of $10,000. The related interest revenue would be taxed on a cash basis. Property, plant and equipment included furniture and computer equipment. Furniture was acquired on 1 April 2016 at a cost of $800,000. The company purchased the computer equipment during the...
At the end of the year ABC Company reported long-term debt of $3,974 million and the...
At the end of the year ABC Company reported long-term debt of $3,974 million and the current portion of long-term debt of $219 million. At the end of the prior year they reported long-term debt of $3,503 million and the current portion of long-term debt of $268 million. How much (in $ millions) did the company receive from issuing new long-term debt or pay off any existing debt? If they issued debt, enter your answer as a positive number; if...
On January 2, 2018, the Jackson Company purchased equipment to be used in its manufacturing process....
On January 2, 2018, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $43,625. The expenditures made to acquire the asset were as follows: Purchase price $ 198,000 Freight charges 5,200 Installation charges 8,000 Jackson’s policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment’s life and then switch to straight line halfway through the...
On January 2, 2018, the Jackson Company purchased equipment to be used in its manufacturing process....
On January 2, 2018, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $61,500. The expenditures made to acquire the asset were as follows: Purchase price $ 258,500 Freight charges 9,600 Installation charges 13,500 Jackson’s policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment’s life and then switch to straight line halfway through the...
On January 2, 2018, the Jackson Company purchased equipment to be used in its manufacturing process....
On January 2, 2018, the Jackson Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residual value of $63,125. The expenditures made to acquire the asset were as follows: Purchase price $ 264,000 Freight charges 10,000 Installation charges 14,000 Jackson’s policy is to use the double-declining-balance (DDB) method of depreciation in the early years of the equipment’s life and then switch to straight line halfway through the...
The year-end Year 2 financial statements for Grandier Inc., report net sales of $115,004 million, net...
The year-end Year 2 financial statements for Grandier Inc., report net sales of $115,004 million, net operating profit after tax of $4,593 million, net operating assets of $39,502 million. The year-end Year 1 balance sheet reports net operating assets of $41,829 million. The company’s year-end Year 2 net operating asset turnover is: Select one: a. 2.91 b. There is not enough information to calculate the ratio. c. 11.6% d. 11.3% e. 2.83
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT