Concepts coveredFINAL EXAM - Part IOutline of Topics coveredTopicWeek CoveredPerm Ms1, 2Temp Ms1, 2AMT3Tax Credits3Valuation Allowance3 (lesson 2)State Blended Rate4Interim Financial reporting5FIN 486, 7True-up9FS Disclosures8, 9Foreign - APB 2311, 12Stock Options13, 14 INDEXDELTA Corporation & SubsidiaryFINAL EXAM Part 1INDEX to workpaperstab #Tab DescriptionQQuestions to be answeredYellow tab - Facts providedFDELTA Corporation FactsFADelta Fixed Asset RollforwardFCFoxtrot Corporation FactsI2009 Interim ScheduleCDelta Current ProvisionPDelta 2011 Provision-to-Return scheduleDDelta Deferred Rollforward scheduleTATax Account Rollforward scheduleRRate ReconciliationFS2012 Consolidated Income Tax Footnote disclosure &A &Z&F Printed on: &D &T Q - Questions to be answeredDELTA Corporation & SubsidiaryFINAL EXAM Part 1TasksConsidering the facts outlined on tab "F" determine the following -1For 2009 only - determine the interim tax expense by completing the schedule on tab IConsider only pre-tax income, perms and credits from facts tab. Assume no VA recorded for this portion of the exercise.2Prepare a current provision and deferred rollforward schedule for each of the years 2009 through 2012.see example for 2009 at tabs C and D3Compute the 2011 provision-to-return JE and post as part of the 2012 provision - use the template on tab P as a guide4Complete the Tax Account Analysis schedule tab TA for each year 2009 to 2012.Note - actual taxes paid are reflected on this tab5Complete a Rate Reconciliation schedule tab R for each year 2009 to 2012.see example for 20096Prepare a current and deferred tax provision for Foxtrot Corporation for the year 2012 (in FC and RC). - see facts at tab FC and complete the yellow highlighted cells in the trial balance.7For 2012 only - create the Consolidated Income Tax footnotes (with 2011 comparison) (i.e., Delta + Foxtrot). - use the templates on tab FS as a guidePlease show all your work (to provide for maximum credit).Feel free to add columns, rows, & worksheets as necessary to complete the above tasksPlease reference your workpapers to make the review easier.Note - there are hidden columns on tabs C, D, and P that you may want to use &A &Z&F Printed on: &D &T F - Delta FactsDELTA CorporationFACTSlinkDELTA is a "C" corporation (SEC registrant) operating entirely within the U.S. on the basis of a calendar year end. Delta was formed 1/1/2009.Year 2009Year 2010Year 2011Year 2012per returnper returnper provisionper return (only if different)per provisionFederal Tax Rate35%35%35%35%States - 100% NV - 0% rate100% NV - 0% rate100% OR @ 7.6% flat tax rate80% OR @ 7.6% rate20% IL @ 7.00% flat tax rateAssume no fed/state differences other than state tax deduction which is not deductible for state tax purposes.Assume states do not have an AMT tax concept.Assume headquarters moved from Reno Nevada to Portland Oregon on 1/1/2011. Assume began operations in Illinois on 1/1/2012. [Hint - Prior YE deferred tax balance sho.

1. Concepts coveredFINAL EXAM - Part IOutline of Topics
coveredTopicWeek CoveredPerm Ms1, 2Temp Ms1, 2AMT3Tax
Credits3Valuation Allowance3 (lesson 2)State Blended
Rate4Interim Financial reporting5FIN 486, 7True-up9FS
Disclosures8, 9Foreign - APB 2311, 12Stock Options13, 14
INDEXDELTA Corporation & SubsidiaryFINAL EXAM Part
1INDEX to workpaperstab #Tab DescriptionQQuestions to be
answeredYellow tab - Facts providedFDELTA Corporation
FactsFADelta Fixed Asset RollforwardFCFoxtrot Corporation
FactsI2009 Interim ScheduleCDelta Current ProvisionPDelta
2011 Provision-to-Return scheduleDDelta Deferred Rollforward
scheduleTATax Account Rollforward scheduleRRate
ReconciliationFS2012 Consolidated Income Tax Footnote
disclosure
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Q - Questions to be answeredDELTA Corporation &
SubsidiaryFINAL EXAM Part 1TasksConsidering the facts
outlined on tab "F" determine the following -1For 2009 only -
determine the interim tax expense by completing the schedule
on tab IConsider only pre-tax income, perms and credits from
facts tab. Assume no VA recorded for this portion of the
exercise.2Prepare a current provision and deferred rollforward
schedule for each of the years 2009 through 2012.see example
for 2009 at tabs C and D3Compute the 2011 provision-to-return
JE and post as part of the 2012 provision - use the template on
tab P as a guide4Complete the Tax Account Analysis schedule
tab TA for each year 2009 to 2012.Note - actual taxes paid are
reflected on this tab5Complete a Rate Reconciliation schedule
tab R for each year 2009 to 2012.see example for 20096Prepare
a current and deferred tax provision for Foxtrot Corporation for

2. the year 2012 (in FC and RC). - see facts at tab FC and
complete the yellow highlighted cells in the trial balance.7For
2012 only - create the Consolidated Income Tax footnotes (with
2011 comparison) (i.e., Delta + Foxtrot). - use the templates on
tab FS as a guidePlease show all your work (to provide for
maximum credit).Feel free to add columns, rows, & worksheets
as necessary to complete the above tasksPlease reference your
workpapers to make the review easier.Note - there are hidden
columns on tabs C, D, and P that you may want to use
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F - Delta FactsDELTA CorporationFACTSlinkDELTA is a "C"
corporation (SEC registrant) operating entirely within the U.S.
on the basis of a calendar year end. Delta was formed
1/1/2009.Year 2009Year 2010Year 2011Year 2012per returnper
returnper provisionper return (only if different)per
provisionFederal Tax Rate35%35%35%35%States - 100% NV -
0% rate100% NV - 0% rate100% OR @ 7.6% flat tax rate80%
OR @ 7.6% rate20% IL @ 7.00% flat tax rateAssume no
fed/state differences other than state tax deduction which is not
deductible for state tax purposes.Assume states do not have an
AMT tax concept.Assume headquarters moved from Reno
Nevada to Portland Oregon on 1/1/2011. Assume began
operations in Illinois on 1/1/2012. [Hint - Prior YE deferred tax
balance should not anticipate this change].Assume federal
deduction for state taxes is on a "current" basis (i.e., federal
deduction = state "current" tax expense)Research expense:
assume book = regular tax expense. In addition, assume yearly
research expense is amortized over 10 years for AMT
purposesFed regular = state tax depreciationsee tab FA for
detailsFed AMT tax depreciationsee tab FA for
detailsOrganizational expenses (incurred 1/1/2009) are
expensed immediately for book purposes. For income tax

3. purposes (pursuant to IRC Sec 248), the 1st $5,000 is expensed
immediately with the remainder amortized SL over 180
monthsIRC Sec. 263A Inventory Absorption % on gross ending
inventory per BS2.0%2.2%2.2%2.3%[Hint: EOY inventory
capitalization DTA = EOY gross inventory x absorption ratio
for year. Book/Tax difference equals EOY Inventory
capitalization less BOY Inventory capitalization. See 2009 &
2010 Current Prov detail for example.]Vacation paid w/in 2.5
months after YE$ - 0$ 20,000$ - 0$ 15,000$ 30,000Add'l
penalty expense discovered w/in "misc expense"$ - 0$ - 0$ -
0$ 5,000$ - 0Research Tax Credit Generated (IRC Sec 280C
election taken) - federal only$ 12,800$ 19,500$ - 0$ -
0The investment in Echo Development, LLC is accounted for
using the equity method of accounting and includes the
$100,000 cash contribution (for both book and tax purposes)
made by Delta Corporation on 1/1/2011 and Delta Corporation's
$60,000 share of Echo Development's book income for the year
ended 12/31/2011 and $40,000 book income for the year ended
12/31/2012.Schedule K1s received from Echo Development,
LLC reflect net rental real estate income as follows -$ 40,000$
50,000$ 50,000ISOs granted - Grant DateDecember 1, 2009
ISO issued to (non-officer)employee Douglas # ISOs
granted2,000 Exercise price per ISO$ 10 FMV at date of
Grant$ 10 Cliff vesting period [i.e., all vest at end of 2
years]2 years Vesting / Exercise DateDecember 1, 2011 FMV
at vesting date$ 16 Sale DateDecember 31, 2012 FMV at date
of Sale$ 20Non-Quals stock options granted - Grant
DateDecember 31, 2009 Options issued to (non-
officer)employee Mildred # Options granted24,000 Exercise
price per option$ 8 FMV option at date of Grant$ 8 FMV
stock at date of Grant$ 16 S/L Vesting period [i.e., 1/3 vest
each year]3 years Exercise date #1June 15, 2011 Per share
FMV at exercise date #1$ 16 Number of options exercised on
date #16,000 Exercise date #2December 31, 2012 Per share
FMV at exercise date #2$ 20 Number of options exercised on
date #218,000 Sale Dateno sale through 12/31/2012Zero

4. opening APIC Pool, post any "windfalls" to Additional-Paid-in-
Capital "APIC" (B/S)Valuation Allowance - Delta recorded a
full valuation allowance against its deferred tax assets in 2009.
In 2010 Delta determined that it was more likely than not that it
would be able to utilize all of its deferred tax assets.FIN 48
analysis - Prior to 2012 Delta had taken the position that it had
no uncertain tax positions, thus it had not recorded any FIN 48
entries. During the preparation of the 2012 tax provision Delta
uncovered a few errors in prior tax returns as follow - - A
review of the liability accounts revealed that Delta's "Other
Accrued Liability" account actually relates to a legal reserve
that has not been settled as of 12/31/2011. - Delta determined
that the R&D credit generated in 2009 and 2010 was overstated
by $2,000 and $3,000 respectively. Delta has decided not to
amend prior returns, but will instead record a FIN 48 liability as
part of its 2012 year-end tax provision Assume a penalty rate
of 3% and an interest rate of 6% (fed & state). Delta has
elected to record FIN 48 interest and penalties as part of its tax
provision expense. Interest and penalties are computed from
the original due date of the impacted tax return to the end of the
financial statement year. Assume FIN 48 Interest is not
deductible for federal or state tax purposes.Foreign Operations -
Delta Corporation formed Foxtrot Corporation on 1/1/2012 as a
wholly-owned subsidiary of Delta Corporation - see tab FC for
details.TRIAL BALANCE - DELTA Corporation yellow
cells in TB need to be completed as part of ExamDr (Cr)Year
2009Year 2010Year 2011Year 2012Balance SheetCash & ST
Investments80,000400,000300,0001,350,000Accounts
Receivable50,000385,0001,800,0002,900,000Allowance for
Doubtful Accounts--(100,000)C(120,000)CInventory (gross
before reserve)100,000C200,000C260,000C300,000CInventory
Obsolescence Reserve [hint: temp]
YourNameHere: Inventory Obsolescence Reserve:
Reserve established against estimated inventory that will be
disposed at zero sales price (i.e., thrown-out as obsolete) rather

5. than being sold.-(50,000)C(70,000)C(40,000)CInvestment in
Echo Development, LLC--160,000200,000Investment in Foxtrot
Corporation---FC100,000Deferred Tax Asset/(Liability) -
Current-TA149,583TATAFixed Asset,
costFA200,000270,000710,000950,000Fixed Asset, Accum
Depr.FA(20,000)(47,000)(88,000)(153,000)Total Assets$
410,000$ 1,307,583$ 2,972,000$ 5,487,000Accounts
Payable(110,067)(229,067)(1,022,900)(742,601)Vacation
Payable-(20,000)(40,000)(50,000)Income Tax
(Payable)/Receivable-TA2,325TA(348,622)TA(1,235,040)Other
Accrued Liabilities--(100,000)(100,000)Deferred Tax
Asset/(Liability) - Non-Current---TAFIN 48 (Liability) - Non-
Current---TALong-Term Debt (to 3rd party
bank)(400,000)(800,000)(600,000)(800,000)Common
Stock(100)(100)(100)(100)APIC(200,833)(274,833)(348,000)(4
12,000)Retained Earnings - BOY-301,00051,000(1,111,000)
Current year
earnings301,000(250,000)(1,162,000)(2,690,000)Total
Liabilities & Equity$ (410,000)$ (1,270,675)$ (3,570,622)$
(7,140,741)-36,908(598,622)(1,653,741)Income
StatementSales(4,000,000)(8,000,000)(10,800,000)(11,300,000)
Cost of Goods
sold1,500,0003,000,0003,625,0003,230,000Officer's base salary
expense (President)400,000850,0001,200,0001,050,000Officer's
base salary expense
(CFO)250,000600,000855,0001,010,000Salary expense (non-
officers)1,000,0001,600,0002,200,0001,800,000Benefits
expense (includes vacation, bonus,
etc.)200,000320,000440,000360,000ISO compensation
expense833C10,000C9,167C-CNon-Qual comp expense-
64,000C64,000C64,000CPayroll tax & license
expense400,000640,000880,000720,000Penalty expense-
C2,000C1,000C4,000CMeals & Entertainment
expense20,000C30,000C44,000C50,000CRent
expense200,000200,000-100,000Supplies
expense19,6679,00010,83349,000Organizational

6. expense50,000C---Bad Debt
expense5,50020,000100,00010,000Depreciation
expenseFA20,000C27,000C41,000C65,000C<Income> Loss
from Echo Development, LLC--(60,000)C(40,000)CResearch
expenses200,000C300,000C--Other Misc
expenses11,00025,000164,00060,000Charitable contribution
expense-5,00040,00030,000Interest income (tax exempt both
fed & state)-C-C(12,000)C-CInterest
expense24,00048,00036,00048,000Pre-tax (Income)/
Loss301,000C(250,000)C(1,162,000)C(2,690,000)CIncome tax
expense / (benefit)-Net (Income) / Loss$ 301,000$
(250,000)$ (1,162,000)$ (2,690,000)
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FA - Fixed Asset rollforwardDELTA Corporation (only)Fixed
Asset Rollforward ScheduleinputlinkAssume all acquisitions
purchased on January 1 each year.Assume no dispositions
during years shown (i.e., when move HQ they transfer all assets
to new location)Note - this schedule provides far more detail
than is necessary for this Exam.Assume elected out of all bonus
depreciationinitial yr12/31/20092010 adds12/31/20102011
adds12/31/20112012 adds12/31/2012Fixed Asset CostBuilding--
-400,000400,000-
400,000Machinery100,00050,000150,00020,000170,000130,000
300,000Furniture100,00020,000120,00020,000140,000110,0002
50,000Total
cost200,00070,000270,000440,000710,000240,000950,000FFFF
Book DepreciationBuilding40 yrSL---
10,00010,00010,00020,000Machinery10
yrSL10,00015,00025,00017,00042,00030,00072,000Furniture10
yrSL10,00012,00022,00014,00036,00025,00061,000Total Book
Depr.20,00027,00047,00041,00088,00065,000153,000FFFFFFF
Net Book

7. Value180,000223,000622,000797,000RegularRegularRegular
Tax Depreciation5-yr7-yrBuilding39.5 yrSL---
10,12710,12710,12720,25420.00%14.29%32.00%24.49%Machin
ery5 yr200%
MACRS20,00042,00062,00039,200101,20053,520154,72019.20
%17.49%assume 1/2 year convention11.52%12.49%Furniture7
yr200%
MACRS14,29027,34841,63825,24666,88436,605103,48911.52%
8.93%assume 1/2 year convention5.76%8.92%Total Regular Tax
Depr.34,29069,348103,63874,573178,211100,252278,4638.93%
CCCC4.46%Net Tax Value165,710AMTAMTAMT Tax
Depreciation5-yr7-yrSLSLBuilding39.5 yrSL---
10,12710,12710,12720,25410.00%7.14%20.00%14.29%Machine
ry5
yrSL10,00025,00035,00032,00067,00047,000114,00020.00%14.
29%assume 1/2 year convention20.00%14.28%Furniture7
yrSL7,14015,71822,85818,57641,43427,85069,28420.00%14.29
%assume 1/2 year convention10.00%14.28%Total AMT Tax
Depr.17,14040,71857,85860,703118,56184,977203,53814.29%C
CCC7.14%
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FC - Foxtrot FactsFoxtrot CorporationFACTSFinal Exam
Question #6inputYear Ended December 31, 2012Task - Compute
the 2012 current and deferred tax provision for Foxtrot
Corporation and complete the yellow highlighted portions of the
trial balance.Delta Corporation formed Foxtrot Corporation on
1/1/2012 as a wholly-owned subsidiary of Delta
Corporation.Foxtrot Corporation operates entirely within
Country Z where the statutory income tax rate is 20%.The
Functional Currency in Country Z is Z$Foxtrot Corporations'
Reporting Currency is the US Dollar.Fines & Penalties are 50%
deductible for income tax purposes in Country Z.Reserves for

8. bad debts are currently deductible on an accrual basis in
Country Z [hint: no temporary difference].Warranties are
deductible on a cash basis only in Country Z.Tax depreciation
computed under the income tax laws of Country Z is Z$
2,000,000 for 2012.Foxtrot Corporation has not made any tax
payments during 2012 to Country Z taxing authorities.Delta
Corporation has made an APB 23 election with respect to
Foxtrot Corporation for 2012.Weighted average FX 2012:F$ to
US$1:1FX rate at 12/31/2012:F$ to US$1:1.1Below is the Trial
Balance of Foxtrot Corporation prior to posting the YE tax
provision -Dr(Cr)Year Ended December 31, 2012FCUS
DollarFunctional Currency of Country ZFX RateReporting
CurrencyCurrent Assets Cash500,0001.1550,000 Accounts
receivable2,000,0001.12,200,000 Reserve for bad
debts(500,000)1.1(550,000)Noncurent Assets Fixed
assets6,000,0001.16,600,000 Accumulated
depreciation(1,000,000)1.1(1,100,000)Total
Assets7,000,0007,700,000Current Liabilities Accounts
payable(5,600,000)1.1(6,160,000) Accrued
warranties(800,000)1.1(880,000) Current taxes (payable) /
receivable-1.1- Deferred tax asset / (liability)-1.1-Equity
Common Stock(100,000)Historical(100,000) BOY Retained
earnings-Historical- Book <income>
loss(500,000)Historical(500,000) Cumulative translation
adjustmentCalculated(60,000)Total Liabilities &
Equity(7,000,000)(7,700,000)--Income Statement
Revenue(7,500,000)1.0(7,500,000) Cost of goods
sold2,500,0001.02,500,000 Bad debt
expense500,0001.0500,000 Depreciation1,000,0001.01,000,000
Fines & penalties500,0001.0500,000
Other2,500,0001.02,500,000Pre-tax (Income)/
Loss(500,000)(500,000)Income tax expense / (benefit)-1.0-Net
(Income) / Loss(500,000)(500,000)
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I - 2009 Interim scheduleDELTA Corporation (only)2009
Interim ReportingFinal Exam Question #1The below table lists
(in column C of rows 9 to 12) pre-tax income for each quarter in
2009 Task - Complete the amounts in column EConsider only
pre-tax income, perms and credits. Assume no VA recorded for
this portion of the exercise (i.e., credits useable).Use the data
provided on tabs F and C as the basis for your 2009 interim
calculationsReporting PeriodQ Ordinary Income <Loss>YTD
Ordinary Income <Loss>YTD Tax Expense <Benefit>Less
Previously ReportedReporting Period OnlyQ1100,000100,000--
Q2(200,000)(100,000)--Q3(400,000)(500,000)--
Q4199,000(301,000)--Annual(301,000)-[Hint: there is a perm
that isn't known until Q4]
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C - Current ProvDELTA Corporation (only)Current Provision
Calculationinputlinknot
used2009201020112012FederalStateFederalFederalStateFederal
FederalStateStateFederalFederalStateState(Dr) / CrDr / (Cr)Dr /
(Cr)(Dr) / Cr(Dr) / CrDr / (Cr)Dr / (Cr)(Dr) / Cr(Dr) / CrDr /
(Cr)Dr / (Cr)(Dr) / CrDr / (Cr)Dr / (Cr)(Dr) / CrDr / (Cr)Dr /
(Cr)Dr / (Cr)Dr / (Cr)(Dr) / CrDr / (Cr)Dr / (Cr)Dr / (Cr)Dr /
(Cr)payable (B/S)Expense (I/S)Deferred (B/S)payable
(B/S)payable (B/S)Expense (I/S)Deferred (B/S)payable
(B/S)payable (B/S)Expense (I/S)Deferred (B/S)payable
(B/S)Expense (I/S)Deferred (B/S)payable (B/S)Expense
(I/S)Deferred (B/S)FIN 48 payableAPICpayable (B/S)Expense
(I/S)Deferred (B/S)FIN 48 payableAPICPre-tax
Income/(Loss)F(301,000)(301,000)(301,000)F250,000250,00025
0,000F1,162,0001,162,000FS1,162,0001,162,000F2,690,0002,6
90,000FS2,690,0002,690,000Permanent Differences PenaltiesF-

10. --F--F-FS--F-FS-- Meals & EntertainmentNote
110,00010,00010,000-----FS----FS-- Stock Comp
ExpenseF833833833F--F-FS--F--FS-- Other - Perm #1------F-
FS--F-FS-- Other - Perm #2F---F--F-FS--F--FS--Subtotal
Perm Differences10,83310,833-10,833--------------------Pre-Tax
+ Perms(290,167)(290,167)-(290,167)250,000250,000-
250,0001,162,0001,162,000-1,162,0001,162,000-
2,690,0002,690,000---2,690,0002,690,000---State Tax
Deduction--------------Temporary Differences Other - Reserve
#1Note 6--------D----D--263A Inventory CapitalizationNote
22,0002,000D2,0002,4002,400D2,400--D----D--Inventory
ReserveNote 5--D---D---D----D--Non-Qual Stock Comp per
booksF---F--F---F---Non-Qual Stock Comp per tax--D---D-F-D-
-FFDF---- Other - Reserve #2Note 7--D---D---D----D--Book
DepreciationF20,00020,00020,000F--F---F---Tax
DepreciationFA(34,290)(34,290)D(34,290)FA-D-FA-D--FA-D--
Organizational ExpenseNote 342,00042,000D42,000--D---D----
D-- Other - Adj. per booksF---F--F---F--- Other - Adj. per
tax--D---D-F-D--F-D-- Other - Reserve #3-----------FD----
Subtotal Temp Differences29,710-29,71029,7102,400-
2,4002,400----------------Regular Taxable
Income/(Loss)(260,457)(290,167)29,710(260,457)252,400250,0
002,400252,4001,162,0001,162,000-1,162,0001,162,000-
2,690,0002,690,000---2,690,0002,690,000---NOL C/F
Generated / (Utilized)260,457260,457D260,457D-D---------
Regular Taxable Income/(Loss) after NOL-(290,167)290,167-
252,400250,0002,400252,4001,162,0001,162,000-
1,162,0001,162,000-2,690,0002,690,000---2,690,0002,690,000--
-Tax
RateF35%35%35%F0%F35%35%35%F0%F35%35%35%F0.0%0
.0%F35%35%35%35%35%F0.00%0.00%0.00%0.00%Tax b4
credits-(101,558)101,558-88,34087,500840-406,700406,699----
941,500941,500--------AMT Tax Credit--------D---D-----R&E
Tax Credit-(12,800)12,800D---D-D--D---D--1-F---AMT
Adjustments-----D----Valuation Allowance
Adjustment114,358(114,358)---D--DTax Rate Adjustment-------

11. -Current Year Tax after credits----88,34087,500840-
406,700406,699----941,500941,500--------State Tax after
credits-----FS-----FSFIN 48 Interest------1-FIN 48 Penalty------
1-Total CY Federal + State Tax after credits-
88,340406,700406,699-941,500941,500----= sum 1AMT
Calculation - FSFIN 48 Liability all relates to Calendar
2011Regular taxable income /
(loss)(260,457)252,4001,162,0002,690,000-FIN 48 Tax
Liability (fed + state)plus regular tax depreciation34,290----
Penalty @ 3% of taxless AMT tax depreciationFA(17,140)-
Interest @ 6% of taxplus research tax expenseF200,000--
3/15/2012 to 12/31/2012 = 290 daysless AMT research expense
amortizationNote 4(20,000)---less AMT NOL C/F-(63,307)--
AMT Taxable Income /
(Loss)(63,307)189,0931,162,0002,690,000AMT tax
rate20%20%20%20%AMT tax-37,819232,400538,000Regular
tax-88,340406,700941,500AMT Adj.----Supporting
CalculationsNote 1Meals & Ent Adj.Meals & Ent expense per
booksF20,000FFFdisallowance
%50.0%50.0%50.0%50.0%Disallowed Meals Expense10,000---
Note 2263A Inventory Adj.EOY Inventory per
BSF100,000F200,000FF263A absorption
ratioF2.0%F2.2%FFEOY Inventory Capitalization
Adj.2,0004,400--BOY Inventory Capitalization Adj.-2,000-
current change in 263A Adj.2,0002,400--Note 3Organizational
ExpBook Organizational ExpenseF50,000cF-F-F-Tax immediate
expense(5,000)aCapitalized Tax Org Costs45,000--total tax
amortization period in months180180180180monthly
amortization250---months in year12121212annual tax amort Org
costs3,000b---2009 Tax Org Cost expenseb-a8,000d---Book >
Tax Org Costc-d42,000---Note 4AMT research Expense
Amort.Book/regular tax research expenseF200,000FFFAMT
amortization period in years10101010AMT research amort. on
CY adds20,000---AMT research amort. on PY adds--Total AMT
amort.---Note 5Inventory ReserveEOY reserveF-FBOY reserve-
F---Net change in reserve - CY----Note 6 Other - Reserve

12. #1EOY reserveF-FFFBOY reserve-F--Net change in reserve -
CY----Note 7 Other - Reserve #2EOY reserveFFFless amt
paid w/in 2.5 months of YEFFFBOY reserve-FF-F-less amt paid
w/in 2.5 months of YE-FF-Pper returnNet change in reserve -
CY----
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P - Prov-ReturnDELTA Corporation (only)Provision-to-
ReturnFinal Exam Question #3Calendar 2011Task - Prepare a
Provision-to-Return Reconciliation for 2011 and post the
resulting entry as part of the 2012 YE tax provision.(Dr) / CrDr
/ (Cr)Dr / (Cr)(Dr) / CrDr / (Cr)Dr / (Cr)payable (B/S)Expense
(I/S)Deferred (B/S)payable (B/S)Expense (I/S)Deferred
(B/S)FederalStateper Provisionper ReturnDifferenceper
Provisionper ReturnDifferencePre-tax Income/(Loss)C---C---
Permanent Differences PenaltiesCF--C--- Meals &
EntertainmentC---C--- Stock Comp ExpenseC---C--- Other -
Perm #1C---C--- Other - Perm #2C---C---Subtotal Perm
Differences----------Pre-Tax + Perms----------State Tax
DeductionC----Temporary Differences Other - Reserve #1C---
C---263A Inventory CapitalizationC---C---Inventory ReserveC--
-C---Non-Qual Stock Comp per booksC---C---Non-Qual Stock
Comp per taxC---C--- Other - Reserve #2C--C---Book
DepreciationC---C---Tax DepreciationC---C---Organizational
ExpenseC---C--- Other - Adj. per booksC---C--- Other -
Adj. per taxCF--C--- Other - Reserve #3C---C----Subtotal
Temp Differences----------Regular Taxable Income/(Loss)-------
---NOL C/F UtilizedC--------Regular Taxable Income/(Loss)
after NOL----------Tax
RateC35%35%35%35.0%35.0%C0.0%0.0%0.0%0.0%0.0%Tax
b4 credits----------AMT Tax CreditC---C---R&E Tax CreditC---
C---AMT AdjustmentsC---C---Current Year Tax after credits----
------State Tax after credits-----Total CY Federal + State Tax

13. after credits-----RAMT Calculation - Regular taxable income--
less regular tax depreciation--plus AMT tax depreciationC-less
research tax expenseC-plus AMT research expense
amortizationC-less AMT NOL C/FC-AMT Taxable
(Income)/Loss--AMT tax rate20%20%AMT tax--Regular tax--
AMT Adj.--Note 7Vacation AccrualEOY reserveCFless amt
paid w/in 2.5 months of YECFBOY reserveC-less amt paid w/in
2.5 months of YEC-Net change in reserve - CY--
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D - Deferred RollforwardDELTA Corporation (only)Deferred
Tax Rollforward ScheduleinputlinkDr (Cr)Federal BOYFederal
+ State BOYFederal EOYFederal + State EOY2009 GROSS2010
GROSS2011 GROSS2012 GROSS2009 Tax Effected2010 Tax
Effected2011 Tax Effected2012 Tax EffectedTax effected at
FYE 12/11Tax effected at FYE 12/11Tax effected at FYE
12/12Tax effected at FYE 12/12BOYPYCY ActivityEOYPYCY
ActivityEOYPYCY ActivityEOY2011CY
ActivityEOYBOYPYCY ActivityRate Adj. / EOYPYCY
ActivityRate Adj. / EOYPYCY ActivityRate Adj. / EOY2011CY
ActivityRate Adj. / EOYCurrentNon-CurrentCurrentNon-
CurrentCurrentNon-CurrentCurrentNon-
CurrentC/NC1/1/09True-up2009Other Adj.12/31/09True-
up2010Other Adj.12/31/10True-up2011Other Adj.12/31/11True-
up2012Other Adj.12/31/121/1/09True-
up2009Other12/31/09True-up2010Other12/31/10True-
up2011Other12/31/11True-
up2012Other12/31/12AssetLiabilityAssetLiabilityAssetLiability
AssetLiabilityAssetLiabilityAssetLiabilityAssetLiabilityAssetLi
abilityFEDERAL35%35%35%35%35%35%35%35%35%35%35
%35%35% Other - Reserve #1C--C----C----C---P-C------------
------------------------263A CapitalizationC--C2,000-2,000-
C2,400-4,400-C--4,400P-C--4,400--700-700-840-1,540---1,540-

14. --1,5401,540---1,540---1,540---1,540---Inventory ReserveC--C--
--C----C---P-C------------------------------------Non-Qual Stock
Option CompNC--C----C----C---P-C---------------------------------
--- Other - Reserve #2C--C----C----C---P-C----------------------
--------------Fixed Asset DepreciationNC--C(14,290)-(14,290)-
C--(14,290)-C--(14,290)P-C--(14,290)--(5,002)-(5,002)--
(1)(5,002)---(5,002)---(5,002)---(5,002)---(5,002)---(5,002)---
(5,002)Organizational CostsNC--C42,000-42,000-C--42,000-C--
42,000P-C--42,000--14,700-14,700---14,700---14,700---14,700-
-14,700---14,700---14,700---14,700-Net Operating LossC--
C260,457-260,457-C--260,457-C--260,457-C--260,457--91,160-
91,160---91,160---91,160---91,16091,160---91,160---91,160---
91,160--- Other - Adj.NC--C-----------P-C------------------------
------------ Other - Reserve #3NC--------------C------------------
------------------State TaxesNC----------------------------------------
----------Subtotal--290,167-290,167-2,400-292,567---292,567---
292,567--101,558-101,558-840(1)102,398---102,398---
102,398AMT Tax CreditC------C----C-----------------------R&E
Tax Credit--F12,800-12,800-F-12,800-F(12,800)------------------
----Federal Tax after Credits--114,358-114,358-840(1)115,198-
(12,800)-102,398---102,39892,700-14,700(5,002)92,700-
14,700(5,002)92,700-14,700(5,002)92,700-14,700(5,002)Less
VA--(114,358)-(114,358)--(114,358)--(114,358)--
(114,358)Federal Tax after VA------840(1)840-(12,800)-
(11,960)---
(11,960)92,7009,69892,7009,69892,7009,69892,7009,698State
Tax after VA-----------------TATATotal Tax after VA------
840(1)840-(12,800)-(11,960)---(11,960)TATATATAState
BOYState EOY2009 GROSS2010 GROSS2011 GROSS2012
GROSS2009 Tax Effected2010 Tax Effected2011 Tax
Effected2012 Tax EffectedTax effected at FYE 12/11Tax
effected at FYE 12/12BOYPYCY ActivityEOYPYCY
ActivityEOYPYCY ActivityEOY2011CY
ActivityEOYBOYPYCY ActivityRate Adj. / EOYPYCY
ActivityRate Adj. / EOYPYCY ActivityRate Adj. / EOY2011CY
ActivityRate Adj. / EOYCurrentNon-CurrentCurrentNon-

15. Current1/1/09True-up2009Other Adj.12/31/09True-up2010Other
Adj.12/31/10True-up2011Other Adj.12/31/11True-up2012Other
Adj.12/31/121/1/09True-up2009Other12/31/09True-
up2010Other12/31/10True-up2011Other12/31/11True-
up2012Other12/31/12AssetLiabilityAssetLiabilityAssetLiability
AssetLiabilitySTATE0%0%0%0%0%0%0.0%0% Other -
Reserve #1C--C--------C---P-C----------------------------263A
CapitalizationC--C2,000-2,000-C2,400-4,400-C--4,400P-C--
4,400-------------------------Inventory ReserveC--C--------C---P-
C----------------------------Non-Qual Stock Option CompNC--C--
------C---P-C---------------------------- Other - Reserve #2C--C-
-------C---P-C----------------------------Fixed Asset
DepreciationNC--C(14,290)-(14,290)-C--(14,290)-C--
(14,290)P-C--(14,290)-------------------------Organizational
CostsNC--C42,000-42,000-C--42,000-C--42,000P-C--42,000----
---------------------Net Operating LossC--C--------------------------
-------------- Other - Adj.NC--C--------C---P-C-------------------
--------- Other - Reserve #3NC-------------P-C-------------------
---------Subtotal--29,710-29,710-2,400-32,110---32,110---
32,110-------------------------State Tax Credits-----------------
State Tax after Credits---------------------Less VA-----------------
State Tax after VA-----------------CCCC
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TA - Tax Account ReconDELTA Corporation & SubsidiaryTax
Account Rollforward ScheduleinputFinal Exam Question
#4linkTask - Complete the below Tax Account Rollforward
schedule. [Hint: complete the links in the blue cells]. Dr (Cr)
[Add'l hint: confirm the accuracy of your calculations by
comparing to the Delta Trial Balance amounts at tab F].Taxes
(Payable)/Receivable (B/S)FIN 48 (Payable) / Receivable
(B/S)Deferred Tax (B/S)Tax Expense
(I/S)FederalStateForeignTotalFederalStateInterestPenaltyTotalC

16. urrentNon-CurrentValuation
AllowanceTotalAPICCTACurrentDeferredTotalCashcross-foot
checkBalance at 1/1/2009---------------2009 Estimated Taxes
Paid-------assume all deferreds are "current" for 2009 for
simplicity2009 Tax Provision C---------114,358-(114,358)------
F-Balance at 12/31/2009--------114,358-(114,358)-F2010
Estimated Taxes Paid115,000--115,000(115,000)-2009 Prov-
Return True-up-------------------assume all deferreds are
"current" for 2010 for simplicity2010 Tax Provision C-----------
----F-Balance at 12/31/2010115,000--115,000F-----114,358-
(114,358)-F2011 Estimated Taxes Paid95,00040,000-
135,000(135,000)-2010 Prov-Return True-up-------------------
assume all deferreds are "current" for 2011 for simplicity2011
Tax Provision C---------------F-Balance at
12/31/2011210,00040,000-250,000F-----114,358-(114,358)-
F2012 Estimated Taxes Paid110,00030,000-140,000(140,000)-
Tax Paid w/ 2011 TR------2011 Prov-Return True-upP------------
----2012 Tax Provision - Delta onlyC-----------Reclass - Current
/ Non-Current------------------DBalance at 12/31/2012 - Delta
Only320,00070,000-390,000F-----114,358-(114,358)-Ffor CY
year---F2012 Tax Provision - Foxtrot onlyFC--------------
Balance at 12/31/2012 - Consolidated320,00070,000-
390,000FS-----FS114,358-(114,358)-FSfor CY year---FS"Proof"
of ending Taxes Payable BalanceTaxes paid towards
2012320,00070,000-390,0002012 Tax Provision----Estimated
Balance due w/ 12/31/2012 TRs320,00070,000-390,000
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R - Rate ReconciliationDELTA Corporation &
SubsidiaryinputRate ReconciliationFinal Exam Question
#5linkTask - Complete the Rate Reconciliation for each of the
years 2010 to 2012.Dr (Cr)2009201020112012Gross amtTax
Effected $Tax Effected %Gross amtTax Effected $Tax Effected

17. %Gross amtTax Effected $Tax Effected %Gross amtTax
Effected $Tax Effected %35%35%35%35%Tax Expense /
(Benefit) at Statutory
RateC(301,000)(105,350)35.00%C250,00087,50035.00%C1,162,
000406,70035.00%C / FC3,190,0001,116,50035.00%State Tax
(gross - including rate adj.) b4 True-upC-C-CCState Tax (fed
benefit)---- State Tax (net of fed benefit)-0.00%-0.00%-
0.00%FS-0.00%FSForeign Rate Differential-0.00%-0.00%-
0.00%FC0.00%FSPermanent Differences (domestic only) -Non
deductible penaltiesC--0.00%C-0.00%C-0.00%C-0.00%Meals &
entertainmentC10,0003,500-1.16%C-0.00%C-0.00%C-
0.00%Stock Comp Expense (ISO)C833292-0.10%C-0.00%C-
0.00%FSC-0.00%FS Other - Perm #1C--0.00%C-0.00%C-
0.00%C-0.00% Other - Perm #2C--0.00%C-0.00%C-0.00%C-
0.00%R&E Tax
CreditC(12,800)4.25%C0.00%F0.00%F0.00%Valuation
Allowance Adj.C114,358-37.99%C0.00%-0.00%-0.00%Prior
Year True-up (Fed & State)-0.00%-0.00%-
0.00%FSP0.00%FSFIN 48 Accrual (fed tax only, interest &
penalties)-0.00%-0.00%-0.00%C0.00%Total Tax Expense /
(Benefit) / ETRC-
0.00%C87,50035.00%C406,70035.00%C1,116,50035.00%
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FS - Financial Stmt DisclosureDELTA Corporation &
SubsidiaryIncome Tax Footnote DisclosureFinal Exam Question
#7Year Ended December 31, 2012Task - Prepare the Financial
Statement Disclosures for 2012 (with 2011 comparison)
complete the below templates and add any add'l disclosures you
deem necessaryThe provision for income taxes consists of the
following:Year Ended 12/31/11Year Ended
12/31/12Current:CC-FC Total Current--Deferred:CC-FC
Total Deferred-- Total--The components of earnings before

18. income taxes, by taxing jurisdiction, were as follows for the
years ended December 31:Year Ended 12/31/11Year Ended
12/31/12U.S.CCForeign-FCTotal--The provision for income
taxes for the years ended December 31, 2011 and 2012 differ
from the amount computed by applying the statutory federal
corporate income tax rate of 35% to earnings before income
taxes as a result of the following:Year Ended 12/31/11Year
Ended 12/31/12Statutory RateR35.00%35.00%State Income
Taxes (net of fed benefit)RForeign Tax DifferentialRPermanent
DifferencesRCredits & Other, netREffective Tax
Rate35.00%35.00%The tax effects of temporary differences for
the years ended December 31 that give rise to significant
portions of the deferred tax assets and deferred tax liabilities
are provided below:Year Ended 12/31/11Year Ended
12/31/12Deferred Tax Assets:DD Stock CompensationD Tax
CreditsDD Total-- Valuation Allowance--Total Deferred Tax
Assets (net of VA)--Deferred Tax Liabilities: Property, Plant
& EquipmentDDD Total--Net Deferred Tax Assets--The net
deferred income tax assets are recorded on the Balance Sheet at
December 31 as follows:Year Ended 12/31/11Year Ended
12/31/12Current asset / (liability)DNoncurrent asset /
(liability)D Total--
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Concepts coveredFINAL EXAM - Part IOutline of Topics
coveredTopicWeek CoveredPerm Ms1, 2Temp Ms1, 2AMT3Tax
Credits3Valuation Allowance3 (lesson 2)State Blended
Rate4Interim Financial reporting5FIN 486, 7True-up9FS
Disclosures8, 9Foreign - APB 2311, 12Stock Options13, 14
INDEXDELTA Corporation & SubsidiaryFINAL EXAM Part
1INDEX to workpaperstab #Tab DescriptionQQuestions to be
answeredYellow tab - Facts providedFDELTA Corporation

19. FactsFADelta Fixed Asset RollforwardFCFoxtrot Corporation
FactsI2009 Interim ScheduleCDelta Current ProvisionPDelta
2011 Provision-to-Return scheduleDDelta Deferred Rollforward
scheduleTATax Account Rollforward scheduleRRate
ReconciliationFS2012 Consolidated Income Tax Footnote
disclosure
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Q - Questions to be answeredDELTA Corporation &
SubsidiaryFINAL EXAM Part 1TasksConsidering the facts
outlined on tab "F" determine the following -1For 2009 only -
determine the interim tax expense by completing the schedule
on tab IConsider only pre-tax income, perms and credits from
facts tab. Assume no VA recorded for this portion of the
exercise.2Prepare a current provision and deferred rollforward
schedule for each of the years 2009 through 2012.see example
for 2009 at tabs C and D3Compute the 2011 provision-to-return
JE and post as part of the 2012 provision - use the template on
tab P as a guide4Complete the Tax Account Analysis schedule
tab TA for each year 2009 to 2012.Note - actual taxes paid are
reflected on this tab5Complete a Rate Reconciliation schedule
tab R for each year 2009 to 2012.see example for 20096Prepare
a current and deferred tax provision for Foxtrot Corporation for
the year 2012 (in FC and RC). - see facts at tab FC and
complete the yellow highlighted cells in the trial balance.7For
2012 only - create the Consolidated Income Tax footnotes (with
2011 comparison) (i.e., Delta + Foxtrot). - use the templates on
tab FS as a guidePlease show all your work (to provide for
maximum credit).Feel free to add columns, rows, & worksheets
as necessary to complete the above tasksPlease reference your
workpapers to make the review easier.Note - there are hidden
columns on tabs C, D, and P that you may want to use
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F - Delta FactsDELTA CorporationFACTSlinkDELTA is a "C"
corporation (SEC registrant) operating entirely within the U.S.
on the basis of a calendar year end. Delta was formed
1/1/2009.Year 2009Year 2010Year 2011Year 2012per returnper
returnper provisionper return (only if different)per
provisionFederal Tax Rate35%35%35%35%States - 100% NV -
0% rate100% NV - 0% rate100% OR @ 7.6% flat tax rate80%
OR @ 7.6% rate20% IL @ 7.00% flat tax rateAssume no
fed/state differences other than state tax deduction which is not
deductible for state tax purposes.Assume states do not have an
AMT tax concept.Assume headquarters moved from Reno
Nevada to Portland Oregon on 1/1/2011. Assume began
operations in Illinois on 1/1/2012. [Hint - Prior YE deferred tax
balance should not anticipate this change].Assume federal
deduction for state taxes is on a "current" basis (i.e., federal
deduction = state "current" tax expense)Research expense:
assume book = regular tax expense. In addition, assume yearly
research expense is amortized over 10 years for AMT
purposesFed regular = state tax depreciationsee tab FA for
detailsFed AMT tax depreciationsee tab FA for
detailsOrganizational expenses (incurred 1/1/2009) are
expensed immediately for book purposes. For income tax
purposes (pursuant to IRC Sec 248), the 1st $5,000 is expensed
immediately with the remainder amortized SL over 180
monthsIRC Sec. 263A Inventory Absorption % on gross ending
inventory per BS2.0%2.2%2.2%2.3%[Hint: EOY inventory
capitalization DTA = EOY gross inventory x absorption ratio
for year. Book/Tax difference equals EOY Inventory
capitalization less BOY Inventory capitalization. See 2009 &
2010 Current Prov detail for example.]Vacation paid w/in 2.5
months after YE$ - 0$ 20,000$ - 0$ 15,000$ 30,000Add'l
penalty expense discovered w/in "misc expense"$ - 0$ - 0$ -

21. 0$ 5,000$ - 0Research Tax Credit Generated (IRC Sec 280C
election taken) - federal only$ 12,800$ 19,500$ - 0$ -
0The investment in Echo Development, LLC is accounted for
using the equity method of accounting and includes the
$100,000 cash contribution (for both book and tax purposes)
made by Delta Corporation on 1/1/2011 and Delta Corporation's
$60,000 share of Echo Development's book income for the year
ended 12/31/2011 and $40,000 book income for the year ended
12/31/2012.Schedule K1s received from Echo Development,
LLC reflect net rental real estate income as follows -$ 40,000$
50,000$ 50,000ISOs granted - Grant DateDecember 1, 2009
ISO issued to (non-officer)employee Douglas # ISOs
granted2,000 Exercise price per ISO$ 10 FMV at date of
Grant$ 10 Cliff vesting period [i.e., all vest at end of 2
years]2 years Vesting / Exercise DateDecember 1, 2011 FMV
at vesting date$ 16 Sale DateDecember 31, 2012 FMV at date
of Sale$ 20Non-Quals stock options granted - Grant
DateDecember 31, 2009 Options issued to (non-
officer)employee Mildred # Options granted24,000 Exercise
price per option$ 8 FMV option at date of Grant$ 8 FMV
stock at date of Grant$ 16 S/L Vesting period [i.e., 1/3 vest
each year]3 years Exercise date #1June 15, 2011 Per share
FMV at exercise date #1$ 16 Number of options exercised on
date #16,000 Exercise date #2December 31, 2012 Per share
FMV at exercise date #2$ 20 Number of options exercised on
date #218,000 Sale Dateno sale through 12/31/2012Zero
opening APIC Pool, post any "windfalls" to Additional-Paid-in-
Capital "APIC" (B/S)Valuation Allowance - Delta recorded a
full valuation allowance against its deferred tax assets in 2009.
In 2010 Delta determined that it was more likely than not that it
would be able to utilize all of its deferred tax assets.FIN 48
analysis - Prior to 2012 Delta had taken the position that it had
no uncertain tax positions, thus it had not recorded any FIN 48
entries. During the preparation of the 2012 tax provision Delta
uncovered a few errors in prior tax returns as follow - - A
review of the liability accounts revealed that Delta's "Other

22. Accrued Liability" account actually relates to a legal reserve
that has not been settled as of 12/31/2011. - Delta determined
that the R&D credit generated in 2009 and 2010 was overstated
by $2,000 and $3,000 respectively. Delta has decided not to
amend prior returns, but will instead record a FIN 48 liability as
part of its 2012 year-end tax provision Assume a penalty rate
of 3% and an interest rate of 6% (fed & state). Delta has
elected to record FIN 48 interest and penalties as part of its tax
provision expense. Interest and penalties are computed from
the original due date of the impacted tax return to the end of the
financial statement year. Assume FIN 48 Interest is not
deductible for federal or state tax purposes.Foreign Operations -
Delta Corporation formed Foxtrot Corporation on 1/1/2012 as a
wholly-owned subsidiary of Delta Corporation - see tab FC for
details.TRIAL BALANCE - DELTA Corporation yellow
cells in TB need to be completed as part of ExamDr (Cr)Year
2009Year 2010Year 2011Year 2012Balance SheetCash & ST
Investments80,000400,000300,0001,350,000Accounts
Receivable50,000385,0001,800,0002,900,000Allowance for
Doubtful Accounts--(100,000)C(120,000)CInventory (gross
before reserve)100,000C200,000C260,000C300,000CInventory
Obsolescence Reserve [hint: temp]
YourNameHere: Inventory Obsolescence Reserve:
Reserve established against estimated inventory that will be
disposed at zero sales price (i.e., thrown-out as obsolete) rather
than being sold.-(50,000)C(70,000)C(40,000)CInvestment in
Echo Development, LLC--160,000200,000Investment in Foxtrot
Corporation---FC100,000Deferred Tax Asset/(Liability) -
Current-TA149,583TATAFixed Asset,
costFA200,000270,000710,000950,000Fixed Asset, Accum
Depr.FA(20,000)(47,000)(88,000)(153,000)Total Assets$
410,000$ 1,307,583$ 2,972,000$ 5,487,000Accounts
Payable(110,067)(229,067)(1,022,900)(742,601)Vacation
Payable-(20,000)(40,000)(50,000)Income Tax
(Payable)/Receivable-TA2,325TA(348,622)TA(1,235,040)Other

23. Accrued Liabilities--(100,000)(100,000)Deferred Tax
Asset/(Liability) - Non-Current---TAFIN 48 (Liability) - Non-
Current---TALong-Term Debt (to 3rd party
bank)(400,000)(800,000)(600,000)(800,000)Common
Stock(100)(100)(100)(100)APIC(200,833)(274,833)(348,000)(4
12,000)Retained Earnings - BOY-301,00051,000(1,111,000)
Current year
earnings301,000(250,000)(1,162,000)(2,690,000)Total
Liabilities & Equity$ (410,000)$ (1,270,675)$ (3,570,622)$
(7,140,741)-36,908(598,622)(1,653,741)Income
StatementSales(4,000,000)(8,000,000)(10,800,000)(11,300,000)
Cost of Goods
sold1,500,0003,000,0003,625,0003,230,000Officer's base salary
expense (President)400,000850,0001,200,0001,050,000Officer's
base salary expense
(CFO)250,000600,000855,0001,010,000Salary expense (non-
officers)1,000,0001,600,0002,200,0001,800,000Benefits
expense (includes vacation, bonus,
etc.)200,000320,000440,000360,000ISO compensation
expense833C10,000C9,167C-CNon-Qual comp expense-
64,000C64,000C64,000CPayroll tax & license
expense400,000640,000880,000720,000Penalty expense-
C2,000C1,000C4,000CMeals & Entertainment
expense20,000C30,000C44,000C50,000CRent
expense200,000200,000-100,000Supplies
expense19,6679,00010,83349,000Organizational
expense50,000C---Bad Debt
expense5,50020,000100,00010,000Depreciation
expenseFA20,000C27,000C41,000C65,000C<Income> Loss
from Echo Development, LLC--(60,000)C(40,000)CResearch
expenses200,000C300,000C--Other Misc
expenses11,00025,000164,00060,000Charitable contribution
expense-5,00040,00030,000Interest income (tax exempt both
fed & state)-C-C(12,000)C-CInterest
expense24,00048,00036,00048,000Pre-tax (Income)/
Loss301,000C(250,000)C(1,162,000)C(2,690,000)CIncome tax

24. expense / (benefit)-Net (Income) / Loss$ 301,000$
(250,000)$ (1,162,000)$ (2,690,000)
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FA - Fixed Asset rollforwardDELTA Corporation (only)Fixed
Asset Rollforward ScheduleinputlinkAssume all acquisitions
purchased on January 1 each year.Assume no dispositions
during years shown (i.e., when move HQ they transfer all assets
to new location)Note - this schedule provides far more detail
than is necessary for this Exam.Assume elected out of all bonus
depreciationinitial yr12/31/20092010 adds12/31/20102011
adds12/31/20112012 adds12/31/2012Fixed Asset CostBuilding--
-400,000400,000-
400,000Machinery100,00050,000150,00020,000170,000130,000
300,000Furniture100,00020,000120,00020,000140,000110,0002
50,000Total
cost200,00070,000270,000440,000710,000240,000950,000FFFF
Book DepreciationBuilding40 yrSL---
10,00010,00010,00020,000Machinery10
yrSL10,00015,00025,00017,00042,00030,00072,000Furniture10
yrSL10,00012,00022,00014,00036,00025,00061,000Total Book
Depr.20,00027,00047,00041,00088,00065,000153,000FFFFFFF
Net Book
Value180,000223,000622,000797,000RegularRegularRegular
Tax Depreciation5-yr7-yrBuilding39.5 yrSL---
10,12710,12710,12720,25420.00%14.29%32.00%24.49%Machin
ery5 yr200%
MACRS20,00042,00062,00039,200101,20053,520154,72019.20
%17.49%assume 1/2 year convention11.52%12.49%Furniture7
yr200%
MACRS14,29027,34841,63825,24666,88436,605103,48911.52%
8.93%assume 1/2 year convention5.76%8.92%Total Regular Tax
Depr.34,29069,348103,63874,573178,211100,252278,4638.93%

25. CCCC4.46%Net Tax Value165,710AMTAMTAMT Tax
Depreciation5-yr7-yrSLSLBuilding39.5 yrSL---
10,12710,12710,12720,25410.00%7.14%20.00%14.29%Machine
ry5
yrSL10,00025,00035,00032,00067,00047,000114,00020.00%14.
29%assume 1/2 year convention20.00%14.28%Furniture7
yrSL7,14015,71822,85818,57641,43427,85069,28420.00%14.29
%assume 1/2 year convention10.00%14.28%Total AMT Tax
Depr.17,14040,71857,85860,703118,56184,977203,53814.29%C
CCC7.14%
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FC - Foxtrot FactsFoxtrot CorporationFACTSFinal Exam
Question #6inputYear Ended December 31, 2012Task - Compute
the 2012 current and deferred tax provision for Foxtrot
Corporation and complete the yellow highlighted portions of the
trial balance.Delta Corporation formed Foxtrot Corporation on
1/1/2012 as a wholly-owned subsidiary of Delta
Corporation.Foxtrot Corporation operates entirely within
Country Z where the statutory income tax rate is 20%.The
Functional Currency in Country Z is Z$Foxtrot Corporations'
Reporting Currency is the US Dollar.Fines & Penalties are 50%
deductible for income tax purposes in Country Z.Reserves for
bad debts are currently deductible on an accrual basis in
Country Z [hint: no temporary difference].Warranties are
deductible on a cash basis only in Country Z.Tax depreciation
computed under the income tax laws of Country Z is Z$
2,000,000 for 2012.Foxtrot Corporation has not made any tax
payments during 2012 to Country Z taxing authorities.Delta
Corporation has made an APB 23 election with respect to
Foxtrot Corporation for 2012.Weighted average FX 2012:F$ to
US$1:1FX rate at 12/31/2012:F$ to US$1:1.1Below is the Trial
Balance of Foxtrot Corporation prior to posting the YE tax

26. provision -Dr(Cr)Year Ended December 31, 2012FCUS
DollarFunctional Currency of Country ZFX RateReporting
CurrencyCurrent Assets Cash500,0001.1550,000 Accounts
receivable2,000,0001.12,200,000 Reserve for bad
debts(500,000)1.1(550,000)Noncurent Assets Fixed
assets6,000,0001.16,600,000 Accumulated
depreciation(1,000,000)1.1(1,100,000)Total
Assets7,000,0007,700,000Current Liabilities Accounts
payable(5,600,000)1.1(6,160,000) Accrued
warranties(800,000)1.1(880,000) Current taxes (payable) /
receivable-1.1- Deferred tax asset / (liability)-1.1-Equity
Common Stock(100,000)Historical(100,000) BOY Retained
earnings-Historical- Book <income>
loss(500,000)Historical(500,000) Cumulative translation
adjustmentCalculated(60,000)Total Liabilities &
Equity(7,000,000)(7,700,000)--Income Statement
Revenue(7,500,000)1.0(7,500,000) Cost of goods
sold2,500,0001.02,500,000 Bad debt
expense500,0001.0500,000 Depreciation1,000,0001.01,000,000
Fines & penalties500,0001.0500,000
Other2,500,0001.02,500,000Pre-tax (Income)/
Loss(500,000)(500,000)Income tax expense / (benefit)-1.0-Net
(Income) / Loss(500,000)(500,000)
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I - 2009 Interim scheduleDELTA Corporation (only)2009
Interim ReportingFinal Exam Question #1The below table lists
(in column C of rows 9 to 12) pre-tax income for each quarter in
2009 Task - Complete the amounts in column EConsider only
pre-tax income, perms and credits. Assume no VA recorded for
this portion of the exercise (i.e., credits useable).Use the data
provided on tabs F and C as the basis for your 2009 interim
calculationsReporting PeriodQ Ordinary Income <Loss>YTD

27. Ordinary Income <Loss>YTD Tax Expense <Benefit>Less
Previously ReportedReporting Period OnlyQ1100,000100,000--
Q2(200,000)(100,000)--Q3(400,000)(500,000)--
Q4199,000(301,000)--Annual(301,000)-[Hint: there is a perm
that isn't known until Q4]
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C - Current ProvDELTA Corporation (only)Current Provision
Calculationinputlinknot
used2009201020112012FederalStateFederalFederalStateFederal
FederalStateStateFederalFederalStateState(Dr) / CrDr / (Cr)Dr /
(Cr)(Dr) / Cr(Dr) / CrDr / (Cr)Dr / (Cr)(Dr) / Cr(Dr) / CrDr /
(Cr)Dr / (Cr)(Dr) / CrDr / (Cr)Dr / (Cr)(Dr) / CrDr / (Cr)Dr /
(Cr)Dr / (Cr)Dr / (Cr)(Dr) / CrDr / (Cr)Dr / (Cr)Dr / (Cr)Dr /
(Cr)payable (B/S)Expense (I/S)Deferred (B/S)payable
(B/S)payable (B/S)Expense (I/S)Deferred (B/S)payable
(B/S)payable (B/S)Expense (I/S)Deferred (B/S)payable
(B/S)Expense (I/S)Deferred (B/S)payable (B/S)Expense
(I/S)Deferred (B/S)FIN 48 payableAPICpayable (B/S)Expense
(I/S)Deferred (B/S)FIN 48 payableAPICPre-tax
Income/(Loss)F(301,000)(301,000)(301,000)F250,000250,00025
0,000F1,162,0001,162,000FS1,162,0001,162,000F2,690,0002,6
90,000FS2,690,0002,690,000Permanent Differences PenaltiesF-
--F--F-FS--F-FS-- Meals & EntertainmentNote
110,00010,00010,000-----FS----FS-- Stock Comp
ExpenseF833833833F--F-FS--F--FS-- Other - Perm #1------F-
FS--F-FS-- Other - Perm #2F---F--F-FS--F--FS--Subtotal
Perm Differences10,83310,833-10,833--------------------Pre-Tax
+ Perms(290,167)(290,167)-(290,167)250,000250,000-
250,0001,162,0001,162,000-1,162,0001,162,000-
2,690,0002,690,000---2,690,0002,690,000---State Tax
Deduction--------------Temporary Differences Other - Reserve
#1Note 6--------D----D--263A Inventory CapitalizationNote

28. 22,0002,000D2,0002,4002,400D2,400--D----D--Inventory
ReserveNote 5--D---D---D----D--Non-Qual Stock Comp per
booksF---F--F---F---Non-Qual Stock Comp per tax--D---D-F-D-
-FFDF---- Other - Reserve #2Note 7--D---D---D----D--Book
DepreciationF20,00020,00020,000F--F---F---Tax
DepreciationFA(34,290)(34,290)D(34,290)FA-D-FA-D--FA-D--
Organizational ExpenseNote 342,00042,000D42,000--D---D----
D-- Other - Adj. per booksF---F--F---F--- Other - Adj. per
tax--D---D-F-D--F-D-- Other - Reserve #3-----------FD----
Subtotal Temp Differences29,710-29,71029,7102,400-
2,4002,400----------------Regular Taxable
Income/(Loss)(260,457)(290,167)29,710(260,457)252,400250,0
002,400252,4001,162,0001,162,000-1,162,0001,162,000-
2,690,0002,690,000---2,690,0002,690,000---NOL C/F
Generated / (Utilized)260,457260,457D260,457D-D---------
Regular Taxable Income/(Loss) after NOL-(290,167)290,167-
252,400250,0002,400252,4001,162,0001,162,000-
1,162,0001,162,000-2,690,0002,690,000---2,690,0002,690,000--
-Tax
RateF35%35%35%F0%F35%35%35%F0%F35%35%35%F0.0%0
.0%F35%35%35%35%35%F0.00%0.00%0.00%0.00%Tax b4
credits-(101,558)101,558-88,34087,500840-406,700406,699----
941,500941,500--------AMT Tax Credit--------D---D-----R&E
Tax Credit-(12,800)12,800D---D-D--D---D--1-F---AMT
Adjustments-----D----Valuation Allowance
Adjustment114,358(114,358)---D--DTax Rate Adjustment-------
-Current Year Tax after credits----88,34087,500840-
406,700406,699----941,500941,500--------State Tax after
credits-----FS-----FSFIN 48 Interest------1-FIN 48 Penalty------
1-Total CY Federal + State Tax after credits-
88,340406,700406,699-941,500941,500----= sum 1AMT
Calculation - FSFIN 48 Liability all relates to Calendar
2011Regular taxable income /
(loss)(260,457)252,4001,162,0002,690,000-FIN 48 Tax
Liability (fed + state)plus regular tax depreciation34,290----
Penalty @ 3% of taxless AMT tax depreciationFA(17,140)-

29. Interest @ 6% of taxplus research tax expenseF200,000--
3/15/2012 to 12/31/2012 = 290 daysless AMT research expense
amortizationNote 4(20,000)---less AMT NOL C/F-(63,307)--
AMT Taxable Income /
(Loss)(63,307)189,0931,162,0002,690,000AMT tax
rate20%20%20%20%AMT tax-37,819232,400538,000Regular
tax-88,340406,700941,500AMT Adj.----Supporting
CalculationsNote 1Meals & Ent Adj.Meals & Ent expense per
booksF20,000FFFdisallowance
%50.0%50.0%50.0%50.0%Disallowed Meals Expense10,000---
Note 2263A Inventory Adj.EOY Inventory per
BSF100,000F200,000FF263A absorption
ratioF2.0%F2.2%FFEOY Inventory Capitalization
Adj.2,0004,400--BOY Inventory Capitalization Adj.-2,000-
current change in 263A Adj.2,0002,400--Note 3Organizational
ExpBook Organizational ExpenseF50,000cF-F-F-Tax immediate
expense(5,000)aCapitalized Tax Org Costs45,000--total tax
amortization period in months180180180180monthly
amortization250---months in year12121212annual tax amort Org
costs3,000b---2009 Tax Org Cost expenseb-a8,000d---Book >
Tax Org Costc-d42,000---Note 4AMT research Expense
Amort.Book/regular tax research expenseF200,000FFFAMT
amortization period in years10101010AMT research amort. on
CY adds20,000---AMT research amort. on PY adds--Total AMT
amort.---Note 5Inventory ReserveEOY reserveF-FBOY reserve-
F---Net change in reserve - CY----Note 6 Other - Reserve
#1EOY reserveF-FFFBOY reserve-F--Net change in reserve -
CY----Note 7 Other - Reserve #2EOY reserveFFFless amt
paid w/in 2.5 months of YEFFFBOY reserve-FF-F-less amt paid
w/in 2.5 months of YE-FF-Pper returnNet change in reserve -
CY----
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30. P - Prov-ReturnDELTA Corporation (only)Provision-to-
ReturnFinal Exam Question #3Calendar 2011Task - Prepare a
Provision-to-Return Reconciliation for 2011 and post the
resulting entry as part of the 2012 YE tax provision.(Dr) / CrDr
/ (Cr)Dr / (Cr)(Dr) / CrDr / (Cr)Dr / (Cr)payable (B/S)Expense
(I/S)Deferred (B/S)payable (B/S)Expense (I/S)Deferred
(B/S)FederalStateper Provisionper ReturnDifferenceper
Provisionper ReturnDifferencePre-tax Income/(Loss)C---C---
Permanent Differences PenaltiesCF--C--- Meals &
EntertainmentC---C--- Stock Comp ExpenseC---C--- Other -
Perm #1C---C--- Other - Perm #2C---C---Subtotal Perm
Differences----------Pre-Tax + Perms----------State Tax
DeductionC----Temporary Differences Other - Reserve #1C---
C---263A Inventory CapitalizationC---C---Inventory ReserveC--
-C---Non-Qual Stock Comp per booksC---C---Non-Qual Stock
Comp per taxC---C--- Other - Reserve #2C--C---Book
DepreciationC---C---Tax DepreciationC---C---Organizational
ExpenseC---C--- Other - Adj. per booksC---C--- Other -
Adj. per taxCF--C--- Other - Reserve #3C---C----Subtotal
Temp Differences----------Regular Taxable Income/(Loss)-------
---NOL C/F UtilizedC--------Regular Taxable Income/(Loss)
after NOL----------Tax
RateC35%35%35%35.0%35.0%C0.0%0.0%0.0%0.0%0.0%Tax
b4 credits----------AMT Tax CreditC---C---R&E Tax CreditC---
C---AMT AdjustmentsC---C---Current Year Tax after credits----
------State Tax after credits-----Total CY Federal + State Tax
after credits-----RAMT Calculation - Regular taxable income--
less regular tax depreciation--plus AMT tax depreciationC-less
research tax expenseC-plus AMT research expense
amortizationC-less AMT NOL C/FC-AMT Taxable
(Income)/Loss--AMT tax rate20%20%AMT tax--Regular tax--
AMT Adj.--Note 7Vacation AccrualEOY reserveCFless amt
paid w/in 2.5 months of YECFBOY reserveC-less amt paid w/in
2.5 months of YEC-Net change in reserve - CY--
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D - Deferred RollforwardDELTA Corporation (only)Deferred
Tax Rollforward ScheduleinputlinkDr (Cr)Federal BOYFederal
+ State BOYFederal EOYFederal + State EOY2009 GROSS2010
GROSS2011 GROSS2012 GROSS2009 Tax Effected2010 Tax
Effected2011 Tax Effected2012 Tax EffectedTax effected at
FYE 12/11Tax effected at FYE 12/11Tax effected at FYE
12/12Tax effected at FYE 12/12BOYPYCY ActivityEOYPYCY
ActivityEOYPYCY ActivityEOY2011CY
ActivityEOYBOYPYCY ActivityRate Adj. / EOYPYCY
ActivityRate Adj. / EOYPYCY ActivityRate Adj. / EOY2011CY
ActivityRate Adj. / EOYCurrentNon-CurrentCurrentNon-
CurrentCurrentNon-CurrentCurrentNon-
CurrentC/NC1/1/09True-up2009Other Adj.12/31/09True-
up2010Other Adj.12/31/10True-up2011Other Adj.12/31/11True-
up2012Other Adj.12/31/121/1/09True-
up2009Other12/31/09True-up2010Other12/31/10True-
up2011Other12/31/11True-
up2012Other12/31/12AssetLiabilityAssetLiabilityAssetLiability
AssetLiabilityAssetLiabilityAssetLiabilityAssetLiabilityAssetLi
abilityFEDERAL35%35%35%35%35%35%35%35%35%35%35
%35%35% Other - Reserve #1C--C----C----C---P-C------------
------------------------263A CapitalizationC--C2,000-2,000-
C2,400-4,400-C--4,400P-C--4,400--700-700-840-1,540---1,540-
--1,5401,540---1,540---1,540---1,540---Inventory ReserveC--C--
--C----C---P-C------------------------------------Non-Qual Stock
Option CompNC--C----C----C---P-C---------------------------------
--- Other - Reserve #2C--C----C----C---P-C----------------------
--------------Fixed Asset DepreciationNC--C(14,290)-(14,290)-
C--(14,290)-C--(14,290)P-C--(14,290)--(5,002)-(5,002)--
(1)(5,002)---(5,002)---(5,002)---(5,002)---(5,002)---(5,002)---
(5,002)Organizational CostsNC--C42,000-42,000-C--42,000-C--
42,000P-C--42,000--14,700-14,700---14,700---14,700---14,700-
-14,700---14,700---14,700---14,700-Net Operating LossC--

32. C260,457-260,457-C--260,457-C--260,457-C--260,457--91,160-
91,160---91,160---91,160---91,16091,160---91,160---91,160---
91,160--- Other - Adj.NC--C-----------P-C------------------------
------------ Other - Reserve #3NC--------------C------------------
------------------State TaxesNC----------------------------------------
----------Subtotal--290,167-290,167-2,400-292,567---292,567---
292,567--101,558-101,558-840(1)102,398---102,398---
102,398AMT Tax CreditC------C----C-----------------------R&E
Tax Credit--F12,800-12,800-F-12,800-F(12,800)------------------
----Federal Tax after Credits--114,358-114,358-840(1)115,198-
(12,800)-102,398---102,39892,700-14,700(5,002)92,700-
14,700(5,002)92,700-14,700(5,002)92,700-14,700(5,002)Less
VA--(114,358)-(114,358)--(114,358)--(114,358)--
(114,358)Federal Tax after VA------840(1)840-(12,800)-
(11,960)---
(11,960)92,7009,69892,7009,69892,7009,69892,7009,698State
Tax after VA-----------------TATATotal Tax after VA------
840(1)840-(12,800)-(11,960)---(11,960)TATATATAState
BOYState EOY2009 GROSS2010 GROSS2011 GROSS2012
GROSS2009 Tax Effected2010 Tax Effected2011 Tax
Effected2012 Tax EffectedTax effected at FYE 12/11Tax
effected at FYE 12/12BOYPYCY ActivityEOYPYCY
ActivityEOYPYCY ActivityEOY2011CY
ActivityEOYBOYPYCY ActivityRate Adj. / EOYPYCY
ActivityRate Adj. / EOYPYCY ActivityRate Adj. / EOY2011CY
ActivityRate Adj. / EOYCurrentNon-CurrentCurrentNon-
Current1/1/09True-up2009Other Adj.12/31/09True-up2010Other
Adj.12/31/10True-up2011Other Adj.12/31/11True-up2012Other
Adj.12/31/121/1/09True-up2009Other12/31/09True-
up2010Other12/31/10True-up2011Other12/31/11True-
up2012Other12/31/12AssetLiabilityAssetLiabilityAssetLiability
AssetLiabilitySTATE0%0%0%0%0%0%0.0%0% Other -
Reserve #1C--C--------C---P-C----------------------------263A
CapitalizationC--C2,000-2,000-C2,400-4,400-C--4,400P-C--
4,400-------------------------Inventory ReserveC--C--------C---P-
C----------------------------Non-Qual Stock Option CompNC--C--

33. ------C---P-C---------------------------- Other - Reserve #2C--C-
-------C---P-C----------------------------Fixed Asset
DepreciationNC--C(14,290)-(14,290)-C--(14,290)-C--
(14,290)P-C--(14,290)-------------------------Organizational
CostsNC--C42,000-42,000-C--42,000-C--42,000P-C--42,000----
---------------------Net Operating LossC--C--------------------------
-------------- Other - Adj.NC--C--------C---P-C-------------------
--------- Other - Reserve #3NC-------------P-C-------------------
---------Subtotal--29,710-29,710-2,400-32,110---32,110---
32,110-------------------------State Tax Credits-----------------
State Tax after Credits---------------------Less VA-----------------
State Tax after VA-----------------CCCC
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TA - Tax Account ReconDELTA Corporation & SubsidiaryTax
Account Rollforward ScheduleinputFinal Exam Question
#4linkTask - Complete the below Tax Account Rollforward
schedule. [Hint: complete the links in the blue cells]. Dr (Cr)
[Add'l hint: confirm the accuracy of your calculations by
comparing to the Delta Trial Balance amounts at tab F].Taxes
(Payable)/Receivable (B/S)FIN 48 (Payable) / Receivable
(B/S)Deferred Tax (B/S)Tax Expense
(I/S)FederalStateForeignTotalFederalStateInterestPenaltyTotalC
urrentNon-CurrentValuation
AllowanceTotalAPICCTACurrentDeferredTotalCashcross-foot
checkBalance at 1/1/2009---------------2009 Estimated Taxes
Paid-------assume all deferreds are "current" for 2009 for
simplicity2009 Tax Provision C---------114,358-(114,358)------
F-Balance at 12/31/2009--------114,358-(114,358)-F2010
Estimated Taxes Paid115,000--115,000(115,000)-2009 Prov-
Return True-up-------------------assume all deferreds are
"current" for 2010 for simplicity2010 Tax Provision C-----------
----F-Balance at 12/31/2010115,000--115,000F-----114,358-

34. (114,358)-F2011 Estimated Taxes Paid95,00040,000-
135,000(135,000)-2010 Prov-Return True-up-------------------
assume all deferreds are "current" for 2011 for simplicity2011
Tax Provision C---------------F-Balance at
12/31/2011210,00040,000-250,000F-----114,358-(114,358)-
F2012 Estimated Taxes Paid110,00030,000-140,000(140,000)-
Tax Paid w/ 2011 TR------2011 Prov-Return True-upP------------
----2012 Tax Provision - Delta onlyC-----------Reclass - Current
/ Non-Current------------------DBalance at 12/31/2012 - Delta
Only320,00070,000-390,000F-----114,358-(114,358)-Ffor CY
year---F2012 Tax Provision - Foxtrot onlyFC--------------
Balance at 12/31/2012 - Consolidated320,00070,000-
390,000FS-----FS114,358-(114,358)-FSfor CY year---FS"Proof"
of ending Taxes Payable BalanceTaxes paid towards
2012320,00070,000-390,0002012 Tax Provision----Estimated
Balance due w/ 12/31/2012 TRs320,00070,000-390,000
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R - Rate ReconciliationDELTA Corporation &
SubsidiaryinputRate ReconciliationFinal Exam Question
#5linkTask - Complete the Rate Reconciliation for each of the
years 2010 to 2012.Dr (Cr)2009201020112012Gross amtTax
Effected $Tax Effected %Gross amtTax Effected $Tax Effected
%Gross amtTax Effected $Tax Effected %Gross amtTax
Effected $Tax Effected %35%35%35%35%Tax Expense /
(Benefit) at Statutory
RateC(301,000)(105,350)35.00%C250,00087,50035.00%C1,162,
000406,70035.00%C / FC3,190,0001,116,50035.00%State Tax
(gross - including rate adj.) b4 True-upC-C-CCState Tax (fed
benefit)---- State Tax (net of fed benefit)-0.00%-0.00%-
0.00%FS-0.00%FSForeign Rate Differential-0.00%-0.00%-
0.00%FC0.00%FSPermanent Differences (domestic only) -Non
deductible penaltiesC--0.00%C-0.00%C-0.00%C-0.00%Meals &

35. entertainmentC10,0003,500-1.16%C-0.00%C-0.00%C-
0.00%Stock Comp Expense (ISO)C833292-0.10%C-0.00%C-
0.00%FSC-0.00%FS Other - Perm #1C--0.00%C-0.00%C-
0.00%C-0.00% Other - Perm #2C--0.00%C-0.00%C-0.00%C-
0.00%R&E Tax
CreditC(12,800)4.25%C0.00%F0.00%F0.00%Valuation
Allowance Adj.C114,358-37.99%C0.00%-0.00%-0.00%Prior
Year True-up (Fed & State)-0.00%-0.00%-
0.00%FSP0.00%FSFIN 48 Accrual (fed tax only, interest &
penalties)-0.00%-0.00%-0.00%C0.00%Total Tax Expense /
(Benefit) / ETRC-
0.00%C87,50035.00%C406,70035.00%C1,116,50035.00%
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FS - Financial Stmt DisclosureDELTA Corporation &
SubsidiaryIncome Tax Footnote DisclosureFinal Exam Question
#7Year Ended December 31, 2012Task - Prepare the Financial
Statement Disclosures for 2012 (with 2011 comparison)
complete the below templates and add any add'l disclosures you
deem necessaryThe provision for income taxes consists of the
following:Year Ended 12/31/11Year Ended
12/31/12Current:CC-FC Total Current--Deferred:CC-FC
Total Deferred-- Total--The components of earnings before
income taxes, by taxing jurisdiction, were as follows for the
years ended December 31:Year Ended 12/31/11Year Ended
12/31/12U.S.CCForeign-FCTotal--The provision for income
taxes for the years ended December 31, 2011 and 2012 differ
from the amount computed by applying the statutory federal
corporate income tax rate of 35% to earnings before income
taxes as a result of the following:Year Ended 12/31/11Year
Ended 12/31/12Statutory RateR35.00%35.00%State Income
Taxes (net of fed benefit)RForeign Tax DifferentialRPermanent
DifferencesRCredits & Other, netREffective Tax

36. Rate35.00%35.00%The tax effects of temporary differences for
the years ended December 31 that give rise to significant
portions of the deferred tax assets and deferred tax liabilities
are provided below:Year Ended 12/31/11Year Ended
12/31/12Deferred Tax Assets:DD Stock CompensationD Tax
CreditsDD Total-- Valuation Allowance--Total Deferred Tax
Assets (net of VA)--Deferred Tax Liabilities: Property, Plant
& EquipmentDDD Total--Net Deferred Tax Assets--The net
deferred income tax assets are recorded on the Balance Sheet at
December 31 as follows:Year Ended 12/31/11Year Ended
12/31/12Current asset / (liability)DNoncurrent asset /
(liability)D Total--
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