Question #1 The records of Boomer Corp., in its first year of operation, at the end...

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Question #1 The records of Boomer Corp., in its first year of operation, at the end of 20X8, provided the following data related to income taxes: Accounting earnings (from the SCI) for 20X8 was $1,200,000; the income tax rate is 38%. There were no deferred tax amounts as of the beginning of 20X8. a. Golf club dues expenses in 20X8, $10,000, properly recorded for accounting purposes but not tax deductible at any time. b. Investment revenue in 20X8 $325,000, properly recorded for accounting purposes but not taxable at any time. c. Estimated expense for warranty costs, $70,000; accrued for accounting purpose at the end of 20X8; to be reported for income tax purposes when paid, there were no warranty costs incurred in 20X8. d. Gain on disposal of land, $240,000; recorded for accounting purposes at the end of 20X8; to be reported as a capital gain for income tax purposes when collected at the end of 2x10. e. Costs incurred for development costs, $50,000; deducted for Income tax purposes; recognized for accounting purposes as depreciated. There was no deprecation of development costs in 20X8.. f. Equipment purchased in 20X8, $1,500,000; depreciation $100,000 recorded for accounting purposes in 20X8, CCA of $150,000 was deducted for income tax purposes in 20X8. Required: 1. Are the individual differences listed above permanent differences or temporary/Reversible differences? Question #2 Saturn Ltd. began operations in 20X3. For the first six years of operations, the company had the following pre-tax net earnings (loss): Taxable Year Income Rate 20X3 $ (200,000) 25% 20X4 1,200,000 30% 20X5 1,460,000 30% 20X6 (4,320,000) 30% 20X7 460,000 1,000,000 35% 35% 20X8 There have been no temporary differences between pre-tax accounting income and taxable income. In all years, the probability of loss carryforward use was low. Required: For each year, prepare a journal entry or entries to record income tax expense (recovery). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) Question # 3 Eddison Inc. purchased a capital asset for $224,000 in 20X2. Management estimated that the asset would have an 8-year life with an estimated residual value of $17,000. Management depreciated assets using the straight-line method and recorded a full year's depreciation in the year of purchase. The tax rate is 20%. Assume that in 20X4, management was reviewing its policies relating to its capital asset accounts. Consider the following independent scenarios: Scenario A Scenario B Scenario C Management decided to change the depreciation method to the declining-balance method, using a rate of 20%. This is a change in policy because the change is motivated by a desire to conform to industry practice. Management determined that the equipment was still in excellent condition and anticipated that the useful life has increased. Eddison Inc. now expects that they will be able to use the equipment for an additional year (i.e., 9 years in total). The residual value is now estimated to be $14,400. Management realized that when setting up the depreciation expense for the asset, they forgot to deduct the residual value. Required: 1-a. Determine whether each case is a change in estimate, a change in policy, or an accounting error. 1-b. Determine whether each case is accounted for retrospectively or prospectively. 2. Calculate the 20X4 depreciation expense. 3. Provide a correcting entry for all Scenarios in 20X4. (show your work) Question #1 The records of Boomer Corp., in its first year of operation, at the end of 20X8, provided the following data related to income taxes: Accounting earnings (from the SCI) for 20X8 was $1,200,000; the income tax rate is 38%. There were no deferred tax amounts as of the beginning of 20X8. a. Golf club dues expenses in 20X8, $10,000, properly recorded for accounting purposes but not tax deductible at any time. b. Investment revenue in 20X8 $325,000, properly recorded for accounting purposes but not taxable at any time. c. Estimated expense for warranty costs, $70,000; accrued for accounting purpose at the end of 20X8; to be reported for income tax purposes when paid, there were no warranty costs incurred in 20X8. d. Gain on disposal of land, $240,000; recorded for accounting purposes at the end of 20X8; to be reported as a capital gain for income tax purposes when collected at the end of 2x10. e. Costs incurred for development costs, $50,000; deducted for Income tax purposes; recognized for accounting purposes as depreciated. There was no deprecation of development costs in 20X8.. f. Equipment purchased in 20X8, $1,500,000; depreciation $100,000 recorded for accounting purposes in 20X8, CCA of $150,000 was deducted for income tax purposes in 20X8. Required: 1. Are the individual differences listed above permanent differences or temporary/Reversible differences? Question #2 Saturn Ltd. began operations in 20X3. For the first six years of operations, the company had the following pre-tax net earnings (loss): Taxable Year Income Rate 20X3 $ (200,000) 25% 20X4 1,200,000 30% 20X5 1,460,000 30% 20X6 (4,320,000) 30% 20X7 460,000 1,000,000 35% 35% 20X8 There have been no temporary differences between pre-tax accounting income and taxable income. In all years, the probability of loss carryforward use was low. Required: For each year, prepare a journal entry or entries to record income tax expense (recovery). (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) Question # 3 Eddison Inc. purchased a capital asset for $224,000 in 20X2. Management estimated that the asset would have an 8-year life with an estimated residual value of $17,000. Management depreciated assets using the straight-line method and recorded a full year's depreciation in the year of purchase. The tax rate is 20%. Assume that in 20X4, management was reviewing its policies relating to its capital asset accounts. Consider the following independent scenarios: Scenario A Scenario B Scenario C Management decided to change the depreciation method to the declining-balance method, using a rate of 20%. This is a change in policy because the change is motivated by a desire to conform to industry practice. Management determined that the equipment was still in excellent condition and anticipated that the useful life has increased. Eddison Inc. now expects that they will be able to use the equipment for an additional year (i.e., 9 years in total). The residual value is now estimated to be $14,400. Management realized that when setting up the depreciation expense for the asset, they forgot to deduct the residual value. Required: 1-a. Determine whether each case is a change in estimate, a change in policy, or an accounting error. 1-b. Determine whether each case is accounted for retrospectively or prospectively. 2. Calculate the 20X4 depreciation expense. 3. Provide a correcting entry for all Scenarios in 20X4. (show your work)