Bricks & Mortar Co. (the Company), an SEC registrant, is a manufacturer of construction equipment. The Company
Question:
Bricks & Mortar Co. (the “Company”), an SEC registrant, is a manufacturer of construction equipment. The Company has been in business for more than 50 years, operating profitably for the past 25. In addition, it has an applicable tax rate of 40 percent and no unused tax loss or credit carries forwards. The Company’s fiscal year ends on December 31.
In prior years, the Company determined it had no uncertain tax positions that required recognition under ASC 740. The last date of payment of fiscal year 2009 tax is March 15, 2010, for purposes of accruing interest and penalties under the tax law.
The Company is preparing its financial statements for the year ended December 31, 2009. In determining the amount of its 2009 tax provision, the Company has prepared a draft of its 2009 tax return.
Required:
Issue 1:
• Determine the adjustments required to the Company’s preliminary 2009 financial statements to comply with ASC 740-10 by completing the table provided and justify your position.
• Over what periods should interest be accrued in 2010 for financial reporting purposes? Provide support for your conclusion.
Issue 2:
• Determine the adjustments required to the Company’s preliminary 2009 financial statements to comply with ASC 740-10 by completing the table provided and justify your position.
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello