Madden Corporation wants to determine the amount of deferred tax that should be reported on its 2017 financial statements. It has compiled a list of differences between the accounting conducted for tax purposes and the accounting used for financial reporting (book) purposes.
Required For each of the following items, indicate whether the difference should be classified as a permanent or a temporary difference. 1. During 2017, Madden received interest on state bonds purchased as an investment. The interest can be treated as tax-exempt interest for tax purposes. 2. During 2017, Madden paid for a life insurance premium on two key executives. Madden’s accountant has indicated that the amount of the premium cannot be deducted for income tax purposes. 3. During December 2017, Madden received money for renting a building to a tenant. Madden must report the rent as income on its 2017 tax form. For book purposes, however, the rent will be considered income on the 2018 income statement. 4. Madden owns several pieces of equipment that it depreciates using the straight-line method for book purposes. An accelerated method of depreciation is used for tax purposes, however. 5. Madden offers a warranty on the product it sells. The corporation records the expense of the warranty repair costs in the year the product is sold (the accrual method) for book purposes. For tax purposes, however, Madden is not allowed to deduct the expense until the period the product is repaired. 6. During 2017, Madden was assessed a large fine by the federal government for polluting the environment. Madden’s accountant has indicated that the fine cannot be deducted as an expense for income tax purposes.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more