Question

The information that follows pertains to Richards Refrigeration, Inc.:

At December 31, 2013, temporary differences existed between the financial statement carrying amounts and the tax bases of the following:

No temporary differences existed at the beginning of 2013.

Pretax accounting income was $200 million and taxable income was $145 million for the year ended December 31, 2013. The tax rate is 40%.

Option 1:

How much is the total amount of temporary differences at the end of 2013?

Option 2:

What is the tax rate for Richards Refrigeration, Inc. in 2013?

Option 3:

What was the pretax accounting income for Richards Refrigeration, Inc. in 2013?

Option 4:

What is the difference between taxable income and pretax accounting income for Richards Refrigeration, Inc. in 2013?

Answer 1

Richards Refrigeration, Inc. had a tax rate of 40% in 2013, a pretax accounting income of $200 million, and the difference between taxable income and pretax accounting income was $55 million.

Step-by-step explanation:

The question asks about various aspects of corporate accounting and taxation for Richards Refrigeration, Inc. The company's tax rate in 2013 is specified to be 40%. The pretax accounting income for 2013 is given as $200 million, and this is used to calculate their corporate taxes and identify any temporary differences. The total amount of temporary differences at the end of 2013 can be found by assessing the difference between the financial statement carrying amount and the tax bases. The difference between the company's taxable income and pretax accounting income for the year can be computed using the provided figures.

To answer the quiz on Option 1: The total amount of temporary differences at the end of 2013 is $55 million ($200 million - $145 million). Option 2 has already been provided; the tax rate is 40%. Option 3 has also been given; the pretax accounting income is $200 million. As for Option 4, the difference between taxable income and pretax accounting income for Richards Refrigeration, Inc. in 2013 is $55 million ($200 million - $145 million).