A company had a pretax accounting income of $20 million this year. This included the collection of $100 million of life insurance proceeds when several key executives died in a plane crash. This collection is not recognized as a gain for tax purposes (permanent difference). Temporary differences for the current year netted out to zero. The company has a 20% tax rate and plans to record a DTA (operating loss carryforward) for tax purposes. In the current year, the Company will report a net income of:

-$80 million

Explanation:

Since the $100 million collected from the life insurance policies are not taxable income (they are a permanent difference), the net income = $20 million - $100 million = -$80 million.

Permanent differences occur because companies are allowed by US GAAP to record some expenses or gains for reporting purposes only, but the IRS does not allow them for taxable purposes. Neither life insurance premiums for key employees nor life insurance proceeds upon death of key employees are allowed for taxable purposes. US GAAP allows a company to expense the premiums, but the IRS doesn't. The same happens to gains resulting from life insurance proceeds.

answer(c) factors of production;

the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.