A17-20 Loss Carryback/Carryforward; Temporary Differences; Rate Change (LO 17-2, 17-3, 17-4, 17-6)On 1 January 20X4, Dart Incorporated commenced business operations. The following information is available to you:20X4$90,000Earnings (loss) before taxTax rate (enacted in each year)Depreciation (original cost of assets, $1,000,000)Capital cost allowanceRental revenue recognized*View transaction listJournal entry worksheet1234536%50,00060,00060,0006*There is a rent receivable account at the end of 20X4, because rent revenue was earned in 20X4 but will not be collected until 20X6.This amount is not part of taxable incon In 20X4, but will be taxable income in 20X6 when it is collected.20X5$(410,000)Required:Prepare Journal entries to record tax for 20X4, 20X5, 20X6, and 20X7. Assume that the tax loss carryforward usage in 20X5 isconsidered to be not probable but that in 20X6 the balance of probability shifts and in 20X6 the loss usage is considered to beprobable. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.)Record entry for set-off of current income tax expense payable against losscarryforward.36%50,000020X6$100,00032%50,000120,00020X7$120,00030%50,000110,0004

Deferred tax asset: The deferred tax asset is created when the taxes to be paid as per income tax…

On 1 January 20X4, Dart Incorporated commenced business operations. The following information is available to you: Earnings (loss) before tax Tax rate (enacted in each year) Depreciation (original cost of assets, $1,000,000) Capital cost allowance Rental revenue recognized* 20X4 $90,000 36% 50,000 60,000 60,000 20X5 $(410,000) 36% 50,000 0 20X6 $100,000 32% 50,000 120,000 20X7 $120,000 30% 50,000 110,000

On 1 January 20X4, Dart Incorporated commenced business operations. The following information is available to you: Earnings (loss) before tax Tax rate (enacted in each year) Depreciation (original cost of assets, $1,000,000) Capital cost allowance Rental revenue recognized* 20X4 $90,000 36% 50,000 60,000 60,000 20X5 $(410,000) 36% 50,000 0 20X6 $100,000 32% 50,000 120,000 20X7 $120,000 30% 50,000 110,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Zeff Company prepared the following reconciliation for the · first year of operations: 1,600,000 Pretax financial income Nontaxable interest received Long-term loss accrual in excess of deductible amount Depreciation in excess of financial depreciation ( 50,000) 100,000 ( 250,000) 1,400,000 Taxable income (Tax rate is 30%) What amount should be reported as total income tax expense? a. 495,000 b. 480,000 c. 465,000 d. 420,000 What amount should be reported as deferred tax liability a. 90,000 b. 45,000 с. 75,000 d. 30,000 What amount should be reported as deferred tax asset? a. 30,000 b. 90,000 c. 45,000 d. 75,000
Assessment Task 6 - 1 1. Pine Corporation's books showed pretax income of P600,000 for the year ended December 31, 20x1. In the computation of federal income taxes, the following data were considered: Gain on involuntary conversion (expropriation) P350,000 Depreciation deducted for tax purposes in excess of depreciation deducted for book purposes 50,000 Estimated tax payments during 20x1 70,000 Income tax rate 30% What amount should Pine report as its current income tax liability on its December 31, 20x1, balance sheet? 2. For the year ended December 31, 20x1, Mont Co.'s books showed income of P600,000 before provision for income tax expense. To compute taxable income for taxation purposes, the following items should be noted: Income from exempt municipal bonds P60,000 Depreciation deducted for tax purposes in excess of depreciation recorded on the books 120,000 Proceeds received from life insurance on death of officer 100,000 Estimated tax payments Enacted corporate tax rate 30% What…
stof sestion Simmons Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax: § 430,000; Dividends declared: 320,000; Net income: 1,000,000 and Retained eamings, retained eamings, 1/1/07, as adjusted at Oa Ob. Oc Od $1,570,000. $2,430,000. $3,110,000. $2,000,000. 1/1/07, as reported 2,000,000, Simmons should report
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Current Attempt in Progress Oriole Corporation reports the following information: Correction of understatement of depreciation expense in prior years, net of tax Dividends declared Net income Retained earnings, 1/1/25, as reported Oriole should report retained earnings, 12/31/25, at $9266000. $4520000. © $7986000. © $6706000. Save for Later $1280000 970000 3156000 5800000 Attempts:
Calculating Deferred Tax Balance Evergreen Company's reconciliation between pretax GAAP income and taxable income follows for the year. Pretax GAAP income $560,000 Depreciation adjustment (112,000) Permanent difference Taxable income 3.500 $451,500 The company had one temporary difference due to the GAAP basis of equipment exceeding the tax basis of equipment. Record the income tax journal entry for the year, assuming a tax rate of 25%. Assume that the January 1 deferred tax liability balance was $14,000. Note: Round amounts to the nearest whole dollar. Date Dec. 31 Income Tax Expense Account Name Deferred Tax Liability Income Tax Payable To record income tax expense Dr. 140.875 0 o Cr. 28,000 112.875
E. An entity reported the following assets and liabilities at year-end: Carrying Amount Tax BaseProperty 10,000,000 7,000,000Plant and equipment 5,000,000 4,000,000Inventory 3,000,000 4,000,000Accounts receivable 2,500,000 3,000,000Liabilities 6,000,000 5,500,000The entity had made a provision for inventory obsolescence of P1,000,000. Further, an impairment loss against accounts receivable of P500,000 has been made. The tax rate is 25%.1. What amount should be reported as deferred tax liability?2. What amount should be reported as deferred tax asset?
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Problem 16-8 (Algo) Multiple differences; taxable income given; two years; balance sheet classification; change in tax rate [LO16-1, 16-2, 16-3, 16-5, 16-6, 16-8] Skip to question [The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 936 $ 1,028 Expenses 792 848 Pretax accounting income (income statement) $ 144 $ 180 Taxable income (tax return) $ 108 $ 214 Tax rate: 25% Expenses each year include $54 million from a two-year casualty insurance policy purchased in 2021 for $108 million. The cost is tax deductible in 2021. Expenses include $2 million insurance premiums each year for life insurance on key executives. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2021 and 2022 were $55 million and $71 million, respectively. Subscriptions included in 2021 and…
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