During 2020, Sheffield Co.'s first year of operations, the company reports pretax financial income at $252,300. Sheffield's enacted tax rate is 45% for 2020 and 20% for all later years. Sheffield expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2020, are summarized as follows. Future Years 2021 2022 2023 2025 Total 2024 Future taxable (deductible) amounts: $31,300 $31,300 5,800 Installment sales Depreciation Unearned rent $31,300 5,800 (48,500) (48,500) $93,900 29,000 (97,000) 5,800 $5,800 $5,800 Complete the schedule below to compute deferred taxes at December 31, 2020. (Negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Deferred Tax Future Taxable Temporary Difference (Deductible) Amounts Liability Tax Rate (Asset) $ Installment sales $93,900 1% Depreciation 29,000 1% Unearned rent (97,000) Totals THA 96

During 2020, Sheffield Co.'s first year of operations, the company reports pretax financial income at $252,300. Sheffield's enacted tax rate is 45% for 2020 and 20% for all later years. Sheffield expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2020, are summarized as follows. Future Years 2021 2022 2023 2025 Total 2024 Future taxable (deductible) amounts: $31,300 $31,300 5,800 Installment sales Depreciation Unearned rent $31,300 5,800 (48,500) (48,500) $93,900 29,000 (97,000) 5,800 $5,800 $5,800 Complete the schedule below to compute deferred taxes at December 31, 2020. (Negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Deferred Tax Future Taxable Temporary Difference (Deductible) Amounts Liability Tax Rate (Asset) $ Installment sales $93,900 1% Depreciation 29,000 1% Unearned rent (97,000) Totals THA 96

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 13P

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