Answered: Labor expenses $1,550,000 Material…

Labor expenses $1,550,000 Material costs $785,000 Depreciation Office supplies Debt interest expenses Rental expenses Proceeds from the sale of old cranes $332,500 $15,000 $42,200 $45,000 $43,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter9: Acquisitions Of Property

Section: Chapter Questions

Problem 46P

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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Auburn Crane, Inc., a hydraulic crane service company, had sales revenues of
$4,250,000 during tax year 2013. The following table provides other financial
information relating to the tax year:

The sold cranes had a combined book value of $30,000 at the time of sale.
(a) Determine the taxable income for 2013.
(b) Determine the taxable gains for 2013.
(c) Determine the amount of income taxes and gains taxes (or loss credits) for
2013.

Labor expenses
$1,550,000
Material costs
$785,000
Depreciation
Office supplies
Debt interest expenses
Rental expenses
Proceeds from the sale of old cranes
$332,500
$15,000
$42,200
$45,000
$43,000

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