Happy Mart Sdn Bhd acquired an equipment in Year 2016 for RM100,000 and depreciates it on a straight-line basis over its expected useful life of five years. The equipment has no residual value. For tax purposes, the equipment is depreciated at 25% per annum on a straight-line basis. Tax losses may be carried back against taxable profit of the previous five years. In year 2015, the entity's taxable profit was RM25,000. The tax rate is 20%. Required:- Assuming nil profits/losses after depreciation in years 2016 to 2020, show the current and deferred tax impact in years 2016 to 2020 of the acquisition of the equipment. In this question the proformas are given to you to help you to setting out your answer. Please use a separate sheet for your workings. Year Taxable income Depreciation for tax purposes Taxable profit (tax loss) Current tax expense (income) 2016 2017 2018 2019 2020 Year |Carrying amount Tax base Taxable temporary difference 2016 2017 2018 2019 2020 Opening deferred tax liability Deferred tax expenses (income): Closing deferred tax liability

Happy Mart Sdn Bhd acquired an equipment in Year 2016 for RM100,000 and depreciates it on a straight-line basis over its expected useful life of five years. The equipment has no residual value. For tax purposes, the equipment is depreciated at 25% per annum on a straight-line basis. Tax losses may be carried back against taxable profit of the previous five years. In year 2015, the entity's taxable profit was RM25,000. The tax rate is 20%. Required:- Assuming nil profits/losses after depreciation in years 2016 to 2020, show the current and deferred tax impact in years 2016 to 2020 of the acquisition of the equipment. In this question the proformas are given to you to help you to setting out your answer. Please use a separate sheet for your workings. Year Taxable income Depreciation for tax purposes Taxable profit (tax loss) Current tax expense (income) 2016 2017 2018 2019 2020 Year |Carrying amount Tax base Taxable temporary difference 2016 2017 2018 2019 2020 Opening deferred tax liability Deferred tax expenses (income): Closing deferred tax liability

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 5RE: Turnip Company purchased an asset at a cost of 10,000 with a 10-year life during the current year....

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Turnip Company purchased an asset at a cost of 10,000 with a 10-year life during the current year. Turnip uses differing depreciation methods for financial reporting and income tax purposes. The depreciation expense during the current year for financial reporting is 1,000 and for income tax purposes is 2,000. Turnip is subject to a 30% enacted future tax rate. Prepare a schedule to compute Turnips (a) ending future taxable amount, (b) ending deferred tax liability, and (c) change in deferred tax liability (deferred tax expense) for the current year.
Happy Mart Sdn Bhd acquired an equipment in Year 2016 for RM100,000 anddepreciates it on a straight-line basis over its expected useful life of five years. Theequipment has no residual value. For tax purposes, the equipment is depreciated at25% per annum on a straight-line basis. Tax losses may be carried back againsttaxable profit of the previous five years. In year 2015, the entity's taxable profit wasRM25,000. The tax rate is 20%.
LOVE INC. has a policy of using non-current assets until they can no longer operate and are worthless. On January 1, 2015, it acquired an item of plant and machinery for P100,000. It is being depreciated over 10 years on a straight-line basis. For tax purposes, there is an allowance of 20% per annum on a reducing balance basis. There are two rates of tax: 15% on trading profits and 25% on gains on disposals.What deferred tax balance should LOVE recognized at December 31, 2015, according to PAS 12 Income taxes? a. Deferred tax asset of P2,500b. Deferred tax asset of P1,500c. Deferred tax liability of P2,500 d. Deferred tax liability of P1,500.
Milo Manufacturing uses straight-line depreciation for financial statement reporting and is able to deduct 100% of the cost of equipment in the year the equipment is purchased for tax purposes. Four years after its purchase, one of Milo's manufacturing machines has a book value of $740,000. There were no other temporary differences and no permanent differences. Taxable income was $24 million and Milo’s tax rate is 25%.What is the deferred tax liability to be reported in the balance sheet? Assuming that the deferred tax liability balance was $245,000 the previous year, prepare the appropriate journal entry to record income taxes this year.
afty Ltd purchased an equipment on 1 July 2019 for $500 000, and its useful life to be five years, with no residual value. Assume that the only temporary difference for tax-effect accounting purposes relates to the depreciation of the newly acquired equipment. For tax purposes it can be fully depreciated over two years. The tax rate is assumed to be 30 per cent. Required: SHOW YOUR WORKINGS 1. What would be the balance of the deferred tax asset or deferred tax liability as at 30 June 2022?
Dragon Lord Bhd recognised a deferred tax liability for the year ended 31 December 2017 which is related solely to a difference between rates of capital allowance and depreciation. The carrying amount of plant and equipment was RM30,000,000 and tax written down value was RM20,000,000. The following transaction took place during 2018: During the year, plant was revalued and surplus was RM6,000,000. At the end of the year, the carrying amount of plant was RM42,000,000 and tax written down was RM25,000,000. Gains on revaluation are taxable on sale at 20%. Development expenditure of RM12,000,000 was capitalised in accordance with MFRS 138 but is deducted for tax purpose. There was no amortisation during the year. Dragon Lord Bhd has recognised income receivable of RM2,000,000 but none has been received yet. Dragon Lord Bhd has made provision for environment clean-up of RM1,000,000. The expenditure will be tax deductible when paid only. The trade receivables were disclosed at…
Tafty Ltd purchased an equipment on 1 July 2019 for $500 000, and its useful life to be five years, with no residual value. Assume that the only temporary difference for tax-effect accounting purposes relates to the depreciation of the newly acquired equipment. For tax purposes it can be fully depreciated over two years. The tax rate is assumed to be 30 per cent. Required: SHOW YOUR WORKINGS Determine whether the depreciation of the equipment will lead to a deferred tax asset, or a deferred tax liability? ANSWER i): What would be the balance of the deferred tax asset or deferred tax liability as at 30 June 2022?
Tafty Ltd purchased an equipment on 1 July 2019 for $500 000, and its useful life to be five years, with no residual value. Assume that the only temporary difference for tax-effect accounting purposes relates to the depreciation of the newly acquired equipment. For tax purposes it can be fully depreciated over two years. The tax rate is assumed to be 30 per cent. Required: SHOW YOUR WORKINGS Determine whether the depreciation of the equipment will lead to a deferred tax asset, or a deferred tax liability? 2. What would be the balance of the deferred tax asset or deferred tax liability as at 30 June 2022?
Tafty Ltd purchased an equipment on 1 July 2019 for $500 000, and its useful life to be five years, with no residual value. Assume that the only temporary difference for tax-effect accounting purposes relates to the depreciation of the newly acquired equipment. For tax purposes it can be fully depreciated over two years. The tax rate is assumed to be 30 per cent. Required: SHOW YOUR WORKINGS Determine whether the depreciation of the equipment will lead to a deferred tax asset, or a deferred tax liability?
At the beginning of 2015, Pitman Co. purchased as asset for $1,200,000 with an estimated useful life of 5 years and an estimated salvage value of $200,000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pitman Co.'s tax rate is 40% for 2015 and all future years. At the end of 2015, what are the book basis and the tax basis of the asset? Book basis Tax basis a. 1,000,000 620,000 b. 980,000 620,000 c. 980,000 720,000 d. 1,000,000 720,000 At the end of 2015. which of the following deferred tax accounts and balances is reported on Pitman's balance sheet? Account Balance a. Deferred tax asset 136,000 b. Deferred tax liability 136,000 c. Deferred tax asset 112,000 d. Deferred tax liability 112,000
Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2021 through 2024 except for differences in depreciation on an operational asset. The asset cost $220,000 and is depreciated for income tax purposes in the following amounts: 2021 $ 72,600 2022 96,800 2023 33,000 2024 17,600 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes.Income amounts before depreciation expense and income taxes for each of the four years were as follows: 2021 2022 2023 2024 Accounting income before taxes and depreciation $120,000 140,000 130,000 130,000 Assume the income tax rate for 2021 and 2022 was 30%; however, during 2022, tax legislation was passed to raise the tax rate to 40% beginning in 2023. The 40% rate remained in effect through the years 2023 and 2024. Both the accounting and income tax…
Assume that for a particular company, the only temporary difference for tax-effect accounting purposes relates to the depreciation of a newly acquired machine. The Machine was acquired on 1 July 2018 at the cost of $800,000. Its useful life is considered to be ﬁve years, after which time it is expected to have no residual value. For tax purposes, it can be fully written off over two years. The tax rate is assumed to be 30 per cent. Required 1 Determine whether the depreciation of the Machine will lead to a deferred tax asset or a deferred tax liability? 2 What would be the deferred tax asset balance or deferred tax liability as of 30 June 2021? 3 Briefly explain how a company calculates its current liability 'income tax payable'?