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Question 1-13, pg. 58
CASE A
Income under ITA 3(a):
Employment Income
$58,200
Rental Income
5400
$63,600
Income under ITA 3(b):
Taxable Capital Gains
31,600
Allowable Taxable Losses
(12,400)
19,200
Balance from ITA 3(a) and 3(b)
82,800
Subdivision e deductions
(4000)
Balance from ITA 3(c):
78,800
Deductions under ITA 3(d):
Business Loss
(12,300)
Net Income for Tax Purposes
$66,500
CASE B
Income under ITA 3(a):
Employment Income
$82,600
Rental Income
12,200
$94,800
Income under ITA 3(b):
Taxable Capital Gains
15,600
Allowable Taxable Losses
(23,400)
nil
Balance from ITA 3(a) and 3(b)
94,800
Subdivision e deductions
(5400)
Balance from ITA 3(c):
89,400
Deductions under ITA 3(d):
Business Loss
(8400)
Net Income for Tax Purposes
$81,000
Allowable Capital Loss Carry Over
(23,400 – 15,600)
$7800
CASE C
Income under ITA 3(a):
Employment Income
$46,700
Rental Income
2600
$49,300
Income under ITA 3(b):
Taxable Capital Gains
11,600
Allowable Taxable Losses
(10,700)
900
Balance from ITA 3(a) and 3(b)
50,200
Subdivision e deductions
(11,600)
Balance from ITA 3(c):
38,600
Deductions under ITA 3(d):
Business Loss
(62,300)
Net Income for Tax Purposes
nil
Business Loss Carry Over
(62,300-38,600)
$23,700
CASE D
Income under ITA 3(a):
Employment Income
$33,400
Rental Income
(18,300)
$15,100
Income under ITA 3(b):
Taxable Capital Gains
23,100
Allowable Taxable Losses
(24,700)
nil
Balance from ITA 3(a) and 3(b)
15,100
Subdivision e deductions
(5600)
Balance from ITA 3(c):
9500
Deductions under ITA 3(d):
Business Loss
(46,200)
Net Income for Tax Purposes
nil
Allowable Capital Loss Carry Over
(24,700 – 23,100)
$1600
Business Loss Carry Over
(46,200-9500)
$36,700
Question 2-1, pg. 98
CASE ONE
Date
Tax Payable
Income Withheld
Owing
2020
$18,880
$14,480
$4400
2021
20,320
19,720
600
2022 Esti.
21,760
18,640
3120
Instalments would be required for 2022 as the estimated tax owing in 2022 and 2020 exceeds the $3000 threshold. Instalments for Individuals:
Alternative 1: Current Year / 4
Alternative 2: Preceding Year / 4
Alternative 3: Second Preceding Year/4 + (excess of the net tax owing for the 1
st
preceding year-1/2 second preceding year net tax)/2
The CRA uses alternative 3 in their instalment reminders. 4400/4 =
1100
1100 will be used for the first two payments on March 15 and June 15.
(600-2200)/2 = (800) = nil
No payments will be made on September 15 and December 15 because the amount owing is less than 0.
This will result in total payments of 2200 (1100 x 2) for 2022.
However, this is not the best option for Gladys Nite. If she instead used alternative #2 (Preceding year/4) she could reduce her overall instalment payments.
Using that alternative, we get 600/4 = 150
per payment. These payments would occur on Mar. 15, Jun. 15, Sep. 15, and Dec. 15. This is a significantly better option than alternative #3 despite having to make payments on Sep. 15 and Dec. 15 as it reduces her overall instalment payments from 2200 to 600
.
CASE TWO
Date
Tax Payable
Income Withheld
Owing
2020
$18,880
$19,280
nil
2021
20,320
14,880
5440
2022 Esti.
21,760
18,560
3200
Instalments would be required for 2022 as the estimated tax owing in 2022 and 2021 exceeds the $3000 threshold. CRA Instalment Reminders Nil/4 = nil
The first two payments on Mar. 15 and Jun. 15 would be nil because the amount owing in 2020 is nil.
The next two payments would equal (5440-0)/2 = 2720
on Sep. 15 and Dec. 15. This is not the worst alternative to choose as there is some built in tax deferral compared to alternative #2 which would require equal payments of 1360 throughout the year. However, alternative #1 is the best choice as it reduces the overall instalment payments from 5440 to 3200.
Alternative #1
Current year owing/4
3200/4 = 800
Four payments of 800 on Mar. 15, Jun. 15, Sep. 15, and Dec. 15 would be required under this alternative.
CASE THREE
Date
Tax Payable
Income Withheld
Owing
2020
$18,880
$15,280
3600
2021
20,320
16,160
4160
2022 Esti.
21,760
19,440
2320
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If taxable
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22,000
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190,750
364,200
462,500
693,750
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462,500
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6. The information that follows pertains to Richards Refrigeration, Incorporated:
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Tax Basis
Future Taxable (Deductible) Amount
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$ 120
$ 90
$ 30
Prepaid insurance
50
0
50
Liability-Loss contingency
25
0
(25)
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Status
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DATA TABLE
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20,000
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Q 1
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ACCOUNT TITLE
✓
Dec. 31
Deferred Tax Asset
1
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$ 104
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%24
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[The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021 and 2022 ($ in millions):
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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
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180
Taxable income (tax return)
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Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced
by temporary differences:
($ in thousands)
Taxable income
Future deductible amounts
Future taxable amounts.
Balance(s) at beginning of the year:
Deferred tax asset
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Required:
Situation
1
2
3
4
$ 112
$ 244
$ 252
$ 344
16
20
20
16
16
56
2
16
8
2
For each situation, determine the following:
Note: Enter your answers in thousands rounded to one decimal place (i.e. 1,200 should be entered as 1.2). Negative amounts
should be indicated by a minus sign. Leave no cell blank, enter "O" wherever applicable.
a. Income tax payable currently.
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e. Deferred tax liability change.
f. Income tax…
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Wynn Farms reported a net operating loss of $225,000 for financial reporting and tax purposes in 2021. The enacted
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Income
Taxable
Income
2017$ 73,000
2018 83,000
2019 145,000
2020
Таx
Таxes
Paid
$21,900
24,900
58,000
18,000
Rates
30%
30
40
40,000
45
Required:
1. NOL carrybacks are not allowed for most companies, except for property and casualty insurance companies as well
as some farm-related businesses. Assume Wynn is one of those businesses. Complete the table given below and
prepare the journal entry to recognize the income tax benefit of the net operating loss.
2. Show the lower portion of the 2021 income statement that reports the income tax benefit of the net operating loss.
X Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required Required Required
1 GJ
1
2
NOL carrybacks are not allowed for most companies, except…
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What amount of current income tax liability should be reported at year end?
a. ₱ 1,780,000
b. ₱ 2,280,000
c. ₱ 2,880,000
d. ₱ 2,580,000
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Save & Exit
Subm
Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by
temporary differences:
SITUATION
Taxable income
Amounts at year-end:
Future deductible amounts
2.
$46,000 $86,000
5,600 10,600
0 5,600
Future taxable amounts
Balances at beginning of year, dr (cr):
Deferred tax asset,
Deferred tax liability
$ 1,000 $ 3,180
0 1,000
The enacted tax rate is 30% for both situations.
Required:
For each situation determine the:
SITUATION
2.
(a.) Income tax payable currently.
(b.) Deferred tax asset - balance at year-end.
(c.) Deferred tax asset change dr or (cr) for the year.
(d.) Deferred tax liability - balance at year-end.
(e.) Deferred tax liability change dr or (cr) for the year.
(f.) Income tax expense for the year.
Next >
31 of 39
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10. Payments made for income taxes P760,000
Income tax payable increased by 200,000
Deferred tax liability, Jan. 1 360,000
Deferred tax liability, Dec. 31 470,000
Deferred tax asset, Jan. 1 85,000
Deferred tax asset, Dec. 31 65,000
Income tax expense under accrual basis accounting is
a. 1,090,000
b. 960,000
c. 850,000
d. 830,000
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Page 3 of 4
I. TAXABLE OR NON-TAXABLE INCOME
Put a CHECK MARK on the appropriate column.
If the benefit is taxable or has a taxable portion, indicate the taxable amount on the column provided.
If TAXABLE, how much is
the taxable amount FOR
THE YEAR?
BENEFIT
PURELY NON-
TAXABLE
TAXABLE
1. Laundry allowance amounting to P 4,500 a year
2. Uniform allowance amounting to P6,500 a year
3. Gifts given during Christmas amounting to
P8,000.
4. One sack of rice (50 kg) each month. The rice is
valued at P50.00 per kilo.
5. A one-time actual medical assistance amounting
to P 25,000.00 was received during the year.
IV. PROBLEM SOLVING
Solve the following problems.
Write your final answer on the space provided. Present your solution at the back page or attach a separate
sheet if necessary.
ANSWER
QUESTION
Leah sells gadgets. She is given 13% 0omm
1
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Hw.52.
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- Problem 16-2 (ACP) Zeus Company reported pretax financial income of P8,000,000 for the year ended December 31, 2021. The taxable income was P9,000,00. The difference is due to rental received in advance. Rental income is taxable when received. The income tax rate is 25% and Zeus Company made estimated tax payment of P1,000,000 during the current year. Required: a. Prepare journal entries relating to income tax for 2021. b. Compute the total income tax expense for 2021.arrow_forwardIntermediate Accoungting ll ch 16arrow_forwardSingle-Schedule X If taxable income is: Over- $ 0 income is: Over- $ 0 22,000 89,450 190,750 364,200 462,500 693,750 But not over- $ 11,000 44,725 95,375 182,100 231,250 578,125 10% 11,000 $ 1,100.00 +12% 44,725 5,147.00 +22% 95,375 16,290.00+ 24% 182,100 37,104.00+ 32% 231,250 52,832.00+ 35% 578,125 174,238.25 + 37% ********* Married filing jointly or Qualifying widow(er)- Schedule Y-1 If taxable But not over- The tax is: ****** The tax is: $ 22,000 89,450 $ 2,200.00+ 12% 190,750 10,294.00+ 22% 364,200 32,580.00 24% 462,500 74,208.00+ 32% 693,750 105,664.00+ 35% 186,601.50+ 37% 2023 Tax Rate Schedules ........10% of the amount over- $ 5 of the amount over- 0 11,000 44,725 95,375 182,100 231,250 578,125 0 22,000 89,450 190,750 364,200 462,500 693,750 Head of household-Schedule Z If taxable income is: Over- $ 0 15,700 59,850 95,350 182,100 231,250 If taxable income is: Over- $ But not over- 0 11,000 44,725 95,375 182,100 231,250 346.875 $ 15,700 59,850 95,350 182,100 231,250 578,100.…arrow_forward
- Intermediate Accounting ll ch 16 6. The information that follows pertains to Richards Refrigeration, Incorporated: At December 31, 2024, temporary differences existed between the financial statement book values and the tax bases of the following: ($ in millions) Book Value Tax Basis Future Taxable (Deductible) Amount Buildings and equipment (net of accumulated depreciation) $ 120 $ 90 $ 30 Prepaid insurance 50 0 50 Liability-Loss contingency 25 0 (25) No temporary differences existed at the beginning of 2024. Pretax accounting income was $200 million and taxable income was $145 million for the year ended December 31, 2024. The tax rate is 25%. Required: Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2024. What is the 2024 net income? General Journal Record 2024 income taxes Transaction General Journal Debit Credit 1arrow_forwardaj.2arrow_forwardRequired information Problem 16-8 Multiple differences; taxable income given; two years; balance sheet classification; change in tax rate [LO16-4, 16-6, 16-8] [The following information applies to the questions displayed below.] Arndt, Inc., reported the following for 2018 and 2019 ($ in millions): 2018 2019 Revenues $ 995 $1,073 Expenses Pretax accounting income (income statement) Taxable income (tax return) 800 840 $ 195 $ 195 233 $ 245 Tax rate: 40% a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2018 for $60 million. The cost is tax deductible in 2018. b. Expenses include $2 million insurance premiums each year for life insurance on key executives. c. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2018 and 2019 were $39 million and $57 million, respectively. Subscriptions included in 2018 and 2019 financial reporting revenues were $36 million ($14 million collected in 2017 but not…arrow_forward
- Status Single DATA TABLE Total Tax Payments $ 8,342 Taxable Income $ 55,060.00 20,000 30,000 Total Tax $ 7,972 40,000 Refund Amount Amount Owed Use Goal Seek to find the Taxable Income (C5) that results in the Total Tax (C7) shown. Answer to the nearest 0.01. Do not include any punctuation ($ or ,) in your answer! Example of accepted answer: 12345.67Examples of incorrect answers: $12,345.67, 12,345.67, $12345.67 Taxable Income Total Tax Answer $2,600 Answer $4,200 Answer $8,500 Answer $10,500 Answer $22,000 Be sure to answer to the neared 0.01.arrow_forwardQuestion 11: The taxable earnings threshold over which FUTA tax is not levied is: Answer: A. O S7,000 В. O $142,800 С. S200,000 D. S250,000arrow_forwardhr.2arrow_forward
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