ACC30005 Lecture Notes - Lecture 2: Accrual, Ordinary Income, Tax Accounting In The United States

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ochreduck413

6 Mar 2019

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Determining in which year in which to account for your ordinary income. Your ordinary income is included in your assessable income in the year derived". Which income year: constructive receipt overrides the cash or accruals approach: You are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct s. 6-5(4), s. 6-10(3) itaa97. Cash basis income derived on receipt: for each type of income there is an appropriate method which is a question of fact (no discretion). Henderson v fct (1970: partners deriving income jointly from a business, professional employees performing principal work, held accrual basis appropriate method. Professional employees mean that salary expense needs to be matched to fees generated. Staff performing most of the professional work. Must use accruals to match cost of sales (salary) J rowe & son pty ltd v fc of t. Must use accruals to account for circulating capital.

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Access the latest annual report, or Form 10-K, of a publicly-traded company of your choice(Amazon) using the companyâs website or www.sec.gov. You can usually access from a companyâs website by clicking on investor relations, then annual reports, and search for latest form 10K. From the SEC website (www.sec.gov), search for the selected companyâs name and then search for its latest form 10-K. Using form 10-K of your selected company, answer the following questions in an essay format.

1) Identify three accounts on your selected companyâs and balance sheet that provide evidence that the company utilizes accrual accounting. Ensure you provide explanations as well as the income statement account that would be affected by the adjustment process.

2) Identify and explain three income statement accounts that may result in accrual and deferrals adjusting entries.

3) Explain depreciation expense, amortization expense, accumulated depreciation, and accumulated amortization? In the financial statements and notes of your selected company, identify the four accounts. How much was each of these four accounts for the most recent year and on which financial statements were each reported?

4) What are income taxes and income tax expense (or provision for income taxes)? In the financial statements and notes of your selected company, identify cash paid for income taxes as well as income tax expense (or provision for income taxes). How much was each of these accounts for the most recent year and on which financial statements was each reported?The company of choice is Amazon

greeneagle805

1.Southlawn Inc.'s taxable income is computed asfollows:


Book income before tax	$	2,405,600
Net permanent differences		(512,000	)
Net temporary differences		(189,000	)
Taxable income	$	1,704,600

Using a 34% rate, compute Southlawn's tax expense per books and taxpayable.

a.Tax expense per books $643,824;tax payable $579,564.

b.Tax expense per books $579,564;tax payable $643,824.

c.Tax expense per books $817,904;tax payable $579,564.

d.None of the choices arecorrect.

2.Monro Inc. uses the accrual method of accounting. Here is areconciliation of Monro's allowance for bad debts for the currentyear.


Beginning allowance for bad debts	$	61,150
Actual write-offs of accounts receivable during the year		(80,000	)
Addition to allowance		88,500
Ending allowance for bad debts	$	69,650

Which of the following statements is true?

a.Bad debt expense per books and the deduction for bad debts is$69,650.

b.Bad debt expense per books and the deduction for bad debts is$88,500.

c.Bad debt expense per books is $80,000, and the deduction forbad debts is $88,500.

d.Bad debt expense per books is $88,500, and the deduction forbad debts is $80,000.

3.On December 12, 2016, Hook Company, a calendar year, cashbasis business, mailed a $5,600 bill to Mrs. Gilder forprofessional services rendered during the month of November. Mrs.Gilder dropped off her $5,600 check at Hook's office on December28, but the company secretary did not deposit the check in Hook'sbank account until January 3. Which of the following statements istrue?

a.According to the constructive receipt doctrine, Hook mustrecognize $5,600 income in 2016.

b.According to the substance over form doctrine, Hook does notrecognize $5,600 income until 2017.

c.As a cash basis taxpayer, Hook does not recognize $5,600income until 2017.

d.As a cash basis taxpayer, Hook can elect to recognize $5,600income in either 2016 or 2017

oliveox7

Access the latest annual report, or Form 10-K, of a publicly-traded company of your choice using the companyâs website or www.sec.gov. You can usually access from a companyâs website by clicking on investor relations, then annual reports, and search for latest form 10K. From the SEC website (www.sec.gov), search for the selected companyâs name and then search for its latest form 10-K. Using form 10-K of your selected company, answer the following questions in an essay format.

2) Identify and explain three income statement accounts that may result in accrual and deferrals adjusting entries.

http://otp.investis.com/clients/us/cocacola_company1/SEC3/sec-show.aspx?Type=html&FilingId=11881168&CIK=0000021344&Index=10000â

http://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/investors/2016-AR-10-K.pdf

yellowchinchilla902

ACC30005 Lecture Notes - Lecture 2: Accrual, Ordinary Income, Tax Accounting In The United States

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