Which аspect оf Cоltrаne’s perfоrmаnce of “My Favorite Things” was considered novel?
Essаy #1 Exаm #3 Summer 2024 The recоrds fоr Sint Mаarten Anguilla Inc. (SMA) shоw this data for 2022, its third year of operations. At the beginning of 2022 there was one cumulative temporary difference with a related deferred tax asset and one cumulative temporary difference with a related deferred tax liability. The following 2022 information for SMA is provided. • Income on installment sales (new for 2022) recorded on the books (GAAP) was $315,000. All sales were debited to Accounts Receivable. SMA collected $105,000 related to the installment sales/receivables. Tax only recognizes collections as taxable income. • Fines and penalties paid during 2022 were $2,000. GAAP expensed the amount while Tax never allows the amount to be deductible. • SMA first machinery was acquired in January 2020 for $300,000 to internally build their own products. Straight-line depreciation over a ten-year life (no salvage value) is used for GAAP. For tax purposes, MACRS depreciation is used and SMA may deduct 15% of the acquisition price as tax depreciation for 2022. The cumulative temp. difference for excess tax depreciation at the beginning of 2022 was $150,000 with a related deferred tax liability of $45,000. Book vs. Tax Partial Depreciation Schedule GAAP Tax Difference Cumulative Difference 2020 $30,000 $90,000 $60,000 $60,000 2021 $30,000 $60,000 $30,000 $90,000 2022 $30,000 $45,000 $15,000 $105,000 • Insurance premiums paid and expensed (GAAP) for corporate officers was $3,500. For tax purposes these premiums are never deductible. •The company maintains an on-going warranty program on certain of the products it sells. At the beginning of 2022, the GAAP records showed a beginning balance in the Warranty Liability of $175,000 (HINT: A "cumulative" amount). Related to this amount was a Deferred Tax Asset beginning balance of $52,500. SMA accrued warranty expense (GAAP) of $32,000 during 2022 for GAAP Purposes. There were no warranty costs paid related to 2022 sales. Warranty repair costs paid during 2022 from 2021 and earlier sales were $80,000 which is deductible for Tax. • During 2022 SMA accrued a loss contingency for a product recall that was highly probable. The accrued loss/expense was $110,000 for GAAP purposes. Tax will not be able to deduct the loss until it is paid which is anticipated in 2026. • Pretax financial income is $880,000. The tax rate is 30%. • Congress/President enacted into law during 2022 an decrease in the federal tax rate to 25% for all tax years starting in 2023 and thereafter. Requirements: (1.) Prepare the appropriate journal entry to record SMA's 2022 income taxes. Show calculations. You may use the Excel Template provided in the first question of the exam to document/prepare your answers. It is highly recommended that you use Excel formulas and cell references, whenever possible, as the essay requires students to evaluate changes in circumstances. Be sure to cut and paste your answers/calculations into Canvas for this essay question. Your Excel file will be attached to this exam in the second question of the exam. (2.) Prepare (in “Good Form”) and present SMA's 2022 net income as it would be shown on the 2022 Income Statement. Your Income Statement should start at Pretax Financial Income (a.k.a. Income from Continuing Operations before Income Tax Expense). (3) Using any Cumulative Temporary Difference that created a Deferred Tax Asset (student choice), name the GAAP account (HINT: Balance Sheet) and its 12/31/22 year-end balance ($$$) that would hold the cumulative temporary difference. (4) Describe and quantify in several sentences the impact of the 2022 income tax provision on the Income Statement for the year ended December 31, 2022 and the Balance Sheet as of December 31, 2022. Include classification of the amounts on the respective financial statements. (5.) Explain in one or two sentences the impact of the following change in circumstances from your answer in #1 above. Your answer should quantify numerically the impact of this change (e.g. income tax expense (benefit) changed to $XXX), if any, as appropriate and it should provide an updated journal entry to record the 2022 income tax provision. CHANGE above as follows: Pre-tax accounting income $100,000. SMA, as a tax policy, carries forward any benefits from a Tax Net Operating Loss. Modifying a copy of the original model used to develop your answer in #1 above is the most efficient way to develop your answer. If you decide to modify your original Tax Model from #1, be sure to copy and paste into Canvas your original answers before you make changes. You may also copy and paste your model into the separate tab (Esssay #1 Req 5 copy) provided.
If yоu wаnt tо use Excel during the exаm, pleаse оpen up the following skeleton Excel template for your use during the exam. The Excel file has certain Essay #1 information embedded and will make completing the requirements efficient. You will find it necessary to add certain labels to the model to properly describe amounts you have calculated. You may modify the template to match your preferences. All answers developed in your excel file should be transferred (copied and pasted) to the Canvas exam, as is our usual custom. You will upload your saved Excel spreadsheet template, with answers, in the question following the first essay question Chapter 19 Essay Question with Student Version Summer 2024-1.xlsx