(TCO B) On its December 31, Year 2, balance sheet, Shin Co. had income taxes payable of $13,000 and a current deferred tax asset of $20,000 before determining the need for a valuation account. Shin had reported a current deferred tax asset of $15,000 at December 31, Year 1. No estimated tax payments were made during Year 2. At December 31, Year 2, Shin determined that it was more likely than not that 10% of the deferred tax asset would not be realized. In its Year 2 income statement, what amount should Shin report as total income tax expense?
There is no current year deduction for these expenses since they were already deducted for taxes in the previous year. And so, the $25,000 reimbursement for expenses in a prior year will be viewed as current year income. 1C. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above? To reduce the taxable income of the $300,000 and the $25,000 John should itemize deductions for the business and for his individual tax return.
An annuity pays $24,000 per year for 11 years (first payment one year from today). You feel the appropriate discount rate is 13%. What is the annuity worth to you today? 10. You deposit $16,000 per year for 12 years (deposits at the end of each year) in an account that pays an annual interest rate of 14%.
Week One Discussion Questions • What are the purposes of a personal budget, balance sheet, and statement of cash flow? The purpose of a personal budget, balance sheet and statement of cash flow is to give a full picture of ones finances. Being oblivious to where ones money is actually going can cause stress which is small compared to the more severe instance of leading to bankruptcy because of a failure to properly manage money. • The Internal Revenue Code (IRC) is the supreme source of income tax law. When trying to resolve an income tax question, a tax practitioner will look to other sources in addition to the IRC.
This is where the business sells its accounts receivables to a business that specialises in debt collection. The debts will be put at a reduced amount by the factoring business, but the advantage is that it provides an injection of cash into the business with funds to continue operating and stops the problem turning into a solvency issue. Woolworths began using a factoring company to collect its accounts receivable at the start of 2015. This is a low-risk funding option for Woolworths and allows the business to meet its financial objective of liquidity. It saves the business time and effort involved in chasing debtors and allows management to focus on the prime function of grocery retailing, although it costs Woolworths a percentage of repayments to do this.
Calculating Revenue. To be conservative, we assume no customers receive a refund which would equate to 1700 people x $80 to equal a revenue of $136,000. If we go strictly by averages, there is a potential of earning $432395 per tax season. This is figured by taking the average refund in Iowa ($2543.51) and multiplying by the set fee of 10%. We then
• A financial asset is considered to have value if it has the ability to generate positive cash flows. • A financial asset is considered to have value if it is acquired at its market value • A financial asset is considered to have value if it is acquired a its book price. When determing the value of a firm, which of the following statements is true? • The timing of cash flows a firm can generate is very important in determing the value of a firm. All else being equal, cash received sooner is better.
A firm’s cash flow statements provides very useful data to help investors understand how a company’s operating activities produce cash for the firm. Perhaps more importantly, investors can use a cash flow statement to determine the possibility of a firm generating new cash flows, otherwise known as future cash flows. Two common ways to analyze a cash flow statements, and other financial statements, is to common size the financial statement and to use various financial ratios. Wal-Mart’s positive cash flow comes from the firms operating activities, with this segment being the only segment of the three; operating, investing, and financing, that has positive cash flow. It is crucial that Wal-Mart keeps the firms operating activities cash flows largely positive.
A cash flow problem is when there is an insufficient amount of money to meet the end of month/year bills. A potential problem maybe overdraft, this is when more money is taken out of a bank account than is in it, when this happens it becomes overdrawn. The business owners, Sharma and Ryan need to think of the problems that they may face, using the cash flow forecast we are able to see that they have a stable net cash flow all throughout the year although they have not thought about the problems that they may face, by buying the capital equipment in full (£105,000) it shows that they have not thought much into there options, they could of spread the costs of the capital across 12 months so that that the monthly costs will be £8750.00, by doing this it will prepare the business for future problems if
If the customer does have bad credit then it’s up to you to take the chance and offer your services. It is sometimes not so good to turn down customers due to a bad credit report because it can cause you a chance to blow a great business deal. But also Keep in mind that if they already have a problem with paying bills and if you choose to still do business with them you can set up a payment arrangement to have the bill automatically drafted out of the account every pay period. This way the payment is never late. This is sometimes the best route to go rather you are bad with paying bills or not.