The long-term liabilities section of CPS Transportation's December 31, 2020, balance sheet included the following: (FV...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The long-term liabilities section of CPS Transportation's December 31, 2020, balance sheet included the following: (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) a. A lease liability with 15 remaining lease payments of $12,000 each, due annually on January 1: Lease liability Less: current portion, The incremental borrowing rate at the inception of the lease was 11% and the lessor's implicit rate, which was known by CPS Transportation, was 10%. $91,273 2,873 $88,400 b. A deferred income tax liability due to a single temporary difference. The only difference between CPS Transportation's taxable. income and pretax accounting income is depreciation on a machine acquired on January 1, 2020, for $300,000. The machine's estimated useful life is five years, with no salvage value. Depreciation is computed using the straight-line method for financial reporting purposes and the MACRS method for tax purposes. Depreciation expense for tax and financial reporting purposes for 2021 through 2024 is as follows: Year 2021 2022 2023 2024 MACRS Depreciation $200,000 50,000 40,000 30,000 Straight-line Depreciation $60,000 60,000 60,000 60,000 Difference $ 40,000 (10,000) (20,000) (30,000) The enacted federal income tax rates are 20% for 2020 and 25% for 2021 through 2024. CPS had a deferred tax liability of $5,000 as of December 31, 2020. For the year ended December 31, 2021, CPS's income before income taxes was $700,000. On July 1, 2021, CPS Transportation issued $400,000 of 9% bonds. The bonds mature in 15 years, and interest is payable each January 1 and July 1. The bonds were issued at a price to yield the investors 10%. CPS records interest at the effective interest rate. Required: 1. Determine CPS Transportation's income tax expense and net income for the year ended December 31, 2021. 2. Determine CPS Transportation's interest expense for the year ended December 31, 2021. 3. Prepare the long-term liabilities section of CPS Transportation's December 31, 2021, balance sheet. The long-term liabilities section of CPS Transportation's December 31, 2020, balance sheet included the following: (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) a. A lease liability with 15 remaining lease payments of $12,000 each, due annually on January 1: Lease liability Less: current portion, The incremental borrowing rate at the inception of the lease was 11% and the lessor's implicit rate, which was known by CPS Transportation, was 10%. $91,273 2,873 $88,400 b. A deferred income tax liability due to a single temporary difference. The only difference between CPS Transportation's taxable. income and pretax accounting income is depreciation on a machine acquired on January 1, 2020, for $300,000. The machine's estimated useful life is five years, with no salvage value. Depreciation is computed using the straight-line method for financial reporting purposes and the MACRS method for tax purposes. Depreciation expense for tax and financial reporting purposes for 2021 through 2024 is as follows: Year 2021 2022 2023 2024 MACRS Depreciation $200,000 50,000 40,000 30,000 Straight-line Depreciation $60,000 60,000 60,000 60,000 Difference $ 40,000 (10,000) (20,000) (30,000) The enacted federal income tax rates are 20% for 2020 and 25% for 2021 through 2024. CPS had a deferred tax liability of $5,000 as of December 31, 2020. For the year ended December 31, 2021, CPS's income before income taxes was $700,000. On July 1, 2021, CPS Transportation issued $400,000 of 9% bonds. The bonds mature in 15 years, and interest is payable each January 1 and July 1. The bonds were issued at a price to yield the investors 10%. CPS records interest at the effective interest rate. Required: 1. Determine CPS Transportation's income tax expense and net income for the year ended December 31, 2021. 2. Determine CPS Transportation's interest expense for the year ended December 31, 2021. 3. Prepare the long-term liabilities section of CPS Transportation's December 31, 2021, balance sheet.
Expert Answer:
Related Book For
Systems Analysis and Design
ISBN: 978-1285171340
10th edition
Authors: Shelly Cashman, Harry J. Rosenblatt
Posted Date:
Students also viewed these finance questions
-
Use Microsoft Word to design a simple fill-in form with at least five fields.
-
Microsoft and a smaller rival often have to select from one of two competing technologies. The rival always prefers to select the same technology as Microsoft (because compatibility is important),...
-
Complete question 4 in your textbook on page 578 (Chapter 23). Create your table in Word as shown on page 578 for this question. Provide your findings in the space provided. Your response should be...
-
The electron affinity of oxygen is -141kJ/mol, corresponding to the reaction O (g) + e- O- (g) The lattice energy of K2O(s) is 2238kJ/mol. Use these data along with data in Appendix C and Figure 7.9...
-
Dr. Walter Wong completed the following business transactions during the month of November: a. Incorporated a veterinary practice by investing (a) $30,000 in cash and (b) equipment worth $20,000. b....
-
A shell-and-tube heat exchanger must be designed to heat 2.5 kg/s of water from 15 to 85C. The heating is to be accomplished by passing hot engine oil, which is available at 160C, through the shell...
-
The soft-ride suspension system of the mountain bike is pinned at C and supported by the shock absorber BD. If it is designed to support a load P = 1500 N, determine the required minimum diameter of...
-
On January 1, 2011, P Company purchased an 80% interest in S Company for $600,000, at which time S Company had retained earnings of $300,000 and capital stock of $350,000. Any difference between book...
-
Discuss the effect of fiscal policy on inflation. Discuss the effect of persistent fiscal stimulus on the economy in the long run. Describe the mechanism of how changes in fiscal policy affect output...
-
If the Bowie plant is sold, those operations will need to shift to the main Largo facility. The CEO is proposing to acquire robotics-based sorting and distribution equipment to facilitate more...
-
Show the matrix and the list representation for this directed graph: 3 4 2 2 S 69 8 2 10 4 2 5 1 7 6
-
Find the dy/dx for the following 3 2x+1.2x+1 (x +1)4 1- y=-
-
Doctoral learners must understand the nature of a researchable dissertation topic and how the variety of available research literature leads to the illumination of a manageable research topic for the...
-
What factors act to constrain the strategy of producing goods in one country for shipment to markets in another. Explain These Factors briefly?
-
1. Four small 0.500-kg spheres, each of which you can regard as a point mass, are arranged in a square 4m on a side and connected by light rods. (See the figure below.) 1m C B 3m D A a) Find the...
-
Tara's treasures has the following Trial Balance: Account Name Cash Debit Credit $50,000 Accounts Receivable $25,000 Land Interest Receivable Building Accumulated Dep-B Equipment $1,000 $346,000...
-
A car generator turns at 590 rpm when the engine is idling. Its 370-turn, 7.20 by 9.20 cm rectangular coil rotates in an adjustable magnetic field so that it can produce sufficient voltage even at...
-
In a certain school district, 3% of the faculty use none of their sick days in a school year. Find the probability that 5 faculty members selected at random used no sick days in a given year.
-
Describe three personal experiences where a project management approach would have been helpful.
-
In Poor Richards Almanac, Benjamin Franklin penned the familiar lines: For the want of a nail the shoe was lost, for the want of a shoe the horse was lost, for the want of a horse the rider was lost,...
-
Will online transactions eventually replace person-to-person contact? Why or why not?
-
Define and distinguish between an independent and an agency adoption.
-
Identify the categories of individuals who can adopt children.
-
Define and give an example of an equitable adoption.
Study smarter with the SolutionInn App