At the end of 2024, Crane Company has $176,700 of cumulative temporary differences that will result in reporting the following future taxable amounts. 2025 $59,200 2026 47,900 2027 39,700 2028 29,900 $176,700 Tax rates enacted as of the beginning of 2023 are: 2023 and 2024 40% 2025 and 2026 30% 2027 and later 25% Crane's taxable income for 2024 is $327,900. Taxable income is expected in all future years. (a) Prepare the journal entry for Crane to record income taxes payable, deferred income taxes, and income tax expense for 2024, assuming that there were no deferred taxes at the end of 2023. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and

At the end of 2024, Crane Company has $176,700 of cumulative temporary differences that will result in reporting the following future taxable amounts. 2025 $59,200 2026 47,900 2027 39,700 2028 29,900 $176,700 Tax rates enacted as of the beginning of 2023 are: 2023 and 2024 40% 2025 and 2026 30% 2027 and later 25% Crane's taxable income for 2024 is $327,900. Taxable income is expected in all future years. (a) Prepare the journal entry for Crane to record income taxes payable, deferred income taxes, and income tax expense for 2024, assuming that there were no deferred taxes at the end of 2023. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 10E: Multiple Temporary Differences Vickers Company reports taxable income of 4,500 for 2019. Vickers has...

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Multiple Temporary Differences Vickers Company reports taxable income of 4,500 for 2019. Vickers has two temporary differences between pretax financial income and taxable income at the end of 2019. The first difference is expected to result in taxable amounts totaling 2,470 in future years. The second difference is expected to result in deductible amounts totaling 1,360 in future years. Vickers has a deferred tax asset of 372 and a deferred tax liability of 690 at the beginning of 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. Vickers has positive, verifiable evidence of future taxable income. Required: Prepare Vickerss income tax journal entry at the end of 2019.
Incomc Taxes Then Company has been in operation for several years. It has both a deductible and a taxable temporary difference. At the beginning of 2019, its deferred tax asset was 690, and its deferred tax liability was 750. The company expects its lutine deductible amount to be deductible in 2020 and its Inline taxable amount to 1 taxable in 2021. In 2018, Congress enacted income tax rates for future years as follows: 2019, 30%; 2020, 34%; and 2021, 35%. At the end of 2019, Then reported income taxes payable of 25,800, an increase in its deferred tax liability of 300, and an ending balance in its deferred tax asset of 860. Thun has prepared the following schedule of items related to its income taxes for 2019. Required: Fill in the blanks in the preceding schedule. Show your calculations.
Comprehensive Colt Company reports pretax financial income of 143,000 in 2019. In addition to pretax income from continuing operations (of which revenues are 295,000), the following items are included in this pretax income: Colts taxable income totals 93,000 in 2019. The difference between the pretax financial income and the taxable income is due to the excess of tax depreciation over financial depreciation on assets used in continuing operations. At the beginning of 2019, Colt had a retained earnings balance of 310.000 and a deferred tax liability of 8,100. During 2019, Colt declared and paid dividends of 48,000. It is subject to tax rates of 15% on the first 50,000 of income and 30% on income in excess of 50,000. Based on proper interperiod tax allocation procedures, Colt has determined that its 2019 ending deferred tax liability is 14,100. Required: 1. Prepare a schedule for Colt to allocate the total 2019 income tax expense to the various components of pretax income. 2. Prepare Colts income tax journal entry at the end of 2019. 3. Prepare Colts 2019 income statement. 4. Prepare Colts 2019 statement of retained earnings. 5. Show the related income tax disclosures on Colts December 31, 2019, balance sheet.
Single Temporary Difference: Multiple Rates At the end of 2019, Fulhage Company reported taxable income of 9,000 and pretax financial income of 10,600. The difference is due to depreciation for tax purposes in excess of depreciation for financial reporting purposes. The income tax rate for the current year is 40%, but Congress has enacted tax rates of 35% for 2020 and 30% for 2021 and beyond. Fulhage has calculated the excess of its financial depreciation over its tax depreciation for future years as follows: 2020, 600; 2021, 700; and 2022, 300. Prior to 2019, the company had no deferred tax liability or asset. Required: Prepare Fulhages income tax journal entry at the end of 2019.
Interperiod Tax Allocation Klerk Company had four temporary differences between its pretax financial income and its taxable income during 2019 as follows: At the beginning of 2019, Klerk had a deferred tax liability of 84,300 related to Temporary Difference #2 and a deferred tax asset of 21,090 related to Temporary Difference #4. Based on its tax records, Klerk earned taxable income of 270,000 for 2019. Kerks accountant has prepared the following schedule showing the total future taxable and deductible amounts at the end of 2019 for its four temporary differences: The company has a history of earning income and expects to be profitable in the future. The income tax rate for 2019 is 40%, but in 2018 Congress enacted a 30% tax rate for 2020 and future years. During 2019, for financial accounting purposes, Klerk reported revenues of 750,000 and expenses of 447,100. The deferred taxes related to Temporary Differences #1, #2, and #4 are considered to be noncurrent by the company; the deferred tax related to Temporary Difference #3 is considered to be current. Required: 1. Prepare Klerks income tax journal entry for 2019. 2. Prepare a condensed 2019 income statement for Klerk. 3. Show how the income tax items are reported on Klerks December 31, 2019, balance sheet.
Temporary and Permanent Differences Lin has just completed its first year of operations and has a number of differences between its pretax financial income and taxable income. The differences at the end of 2019 are as follows: a. Lin recorded 7,000 of interest revenue on municipal bonds during 2019. b. 15,000 of accrual-basis sales were recognized in income during 2019. They are expected to be received in cash during January 2020. c. Depreciation on machinery totaled 28,000 using straight-line depreciation for financial statements. Lins tax accountant recorded 36,000 of depreciation on the companys tax return. d. Lin was fined 3,000 for violating certain labor laws during 2019. Lin paid the fine during 2019 and agreed to ensure future violations would not occur. e. Bryant Corporation has agreed to rent space from Lin in 2020. In December 2019, Lin received 7,500 from Bryant in advance for rent. f. For 2019, Lin reported 9,500 of warranty expense on its income statement. The companys warranty liability at the end of 2019 was 6,250. Lin expects additional warranty costs to be paid during 2020. Required: 1. For each item, determine if it results in a temporary or permanent difference. If the item results in a temporary difference, determine if it results in a deferred tax asset or deferred tax liability. 2. For each item, determine if it initially results in pretax financial income being greater than or less than taxable income. 3. Next Level Discuss why permanent differences do not impact future periods taxable income and how these differences affect tax rates.
E18-10 Multiple Temporary Differences Vickers Company reports taxable income of $4,500 for 2019. Vickers has two temporary differences between pretax financial income and taxable income at the end of 2019. The first difference is expected to result in taxable amounts totaling $2,470 in future years. The second difference is expected to result in deductible amounts totaling $1,360 in future years. Vickers has a deferred tax asset of $372 and a deferred tax liability of $690 at the beginning of 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. Vickers has positive, verifiable evidence of future taxable income. Required: Prepare Vickers’s income tax journal entry at the end of 2019.
At the end of 2024, Pharoah Company has $181,100 of cumulative temporary differences that will result in reporting the following future taxable amounts. 2025 2026 2027 2028 $59,800 51.100 39,000 31.200 $181.100 Tax rates enacted as of the beginning of 2023 are: 2023 and 2024 2025 and 2026 2027 and later 40% 30% 25% h 7074 is $316,200. Taxable income is expected in all future years.
At the end of 2019, Vaughn Company has $181,600 of cumulative temporary differences that will result in reporting the following future taxable amounts. 2020 $60,500 2021 50,200 2022 41,700 2023 29,200 $181,600 Tax rates enacted as of the beginning of 2018 are: 2018 and 2019 40 % 2020 and 2021 30 % 2022 and later 25 % Vaughn’s taxable income for 2019 is $329,300. Taxable income is expected in all future years.(a) Prepare the journal entry for Vaughn to record income taxes payable, deferred income taxes, and income tax expense for 2019, assuming that there were no deferred taxes at the end of 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (b) Prepare the journal entry for Vaughn to…
At the end of 2019, Lucretia McEvil Company has $180,000 of cumulative temporary differences that will result in reporting the following future taxable amounts. 2020 $ 60,000 2021 50,000 2022 40,000 2023 0030,000 $180,000 Tax rates enacted as of the beginning of 2018 are: 2018 and 2019 40% 2020 and 2021 30% 2022 and later 25% McEvil's taxable income for 2019 is $320,000. Taxable income is expected in all future years. Instructions a. Prepare the journal entry for McEvil to record income taxes payable, deferred income taxes, and income tax expense for 2019, assuming that there were no deferred taxes at the end of 2018. b. Prepare the journal entry for McEvil to record income taxes payable, deferred income taxes, and income tax expense for 2019, assuming that there was a balance of $22,000 in a Deferred Tax Liability account at the end of 2018.
A company prepared the following reconciliation for 2021: Pretax financial income for 2021 $719,000 Originating temporary difference 19,000 Permanent difference (38,000) Taxable income $xxxx (Figure this amount out on your own. Note: the parentheses outside the permanent difference mean subtraction). The temporary difference will reverse evenly over the next two years (i.e., 2022 and 2023). The enacted income tax rates are…
Bridgeport Inc. has two temporary differences at the end of 2019. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Bridgeport’s accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows. 2020 2021 2022 2023 Taxable amounts $41,300 $50,000 $61,200 $72,600 Deductible amounts (14,000 ) (18,300 ) $41,300 $36,000 $42,900 $72,600 As of the beginning of 2019, the enacted tax rate is 34% for 2019 and 2020, and 20% for 2021–2024. At the beginning of 2019, the company had no deferred income taxes on its balance sheet. Taxable income for 2019 is $548,000. Taxable income is expected in all future years. (a) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019. (Credit account…