Exam (elaborations)
C239 Topic 5 Computing Corporate Taxable Income test fully solved.
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C239 Topic 5 Computing Corporate Taxable Income test fully solved.
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C239 Topic 5Computing
Corporate
Taxable Income
test fully solved
Depreciation expense - answer Favorable
Difference between depreciation expense for
tax purposes and depreciation expense for
book purposes
Gain or loss on disposition of depreciable
assets - answer Unfavorable
Difference between gain or loss for tax and
book purposes when corporation sells or
disposes of depreciable property. Difference
generally arises because depreciation
expense, and thus the adjusted basis of the
, asset, is different for tax and book purposes.
This difference is essentially the reversal of
the book-tax difference for the depreciation
expense on the asset sold or disposed of.
Bad debt expense - answer Unfavorable
Direct write-off method for tax purposes;
allowance method for book purposes
Unearned rent revenue - answer Unfavorable
Taxable on receipt but recognized when
earned for book purposes
Deferred compensation - answer
Unfavorable
Deductible when accrued for book purposes,
but deductible when paid for tax purposes if
accrued but not paid within 2.5 months after
year-end. Also, accrued compensation to
shareholders owning more than 50% of the
corporation is not deductible until paid.
Organizational expenses and start-up costs -
answer Unfavorable
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