In late 2017 the federal tax rate for subsequent years was decreased from 35% to 21%. How would this affect an existing deferred tax liability? How would the change be reflected in net income?
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In late 2017 the federal tax rate for subsequent years was decreased from 35% to 21%. How would this affect an existing
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- At the beginning of 2018, corporate tax rates decreased from 35% to 21%. Did this decrease in tax rates increase or decrease the advantage of financing with debt?How much is the deferred tax to be recognized in year 2017? Answer is “deferred tax asset of $18 million”. Please explain the reasoning and calculations.Bronson Industries reported a deferred tax liability of $8 million for the year ended December 31, 2017, relatedto a temporary difference of $20 million. The tax rate was 40%. The temporary difference is expected to reversein 2019, at which time the deferred tax liability will become payable. There are no other temporary differences in2017–2019. Assume a new tax law is enacted in 2018 that causes the tax rate to change from 40% to 30% beginning in 2019. (The rate remains 40% for 2018 taxes.) Taxable income in 2018 is $30 million.Required:Determine the effect of the change and prepare the appropriate journal entry to record Bronson’s income taxexpense in 2018. What adjustment, if any, is needed to revise retained earnings as a result of the change?
- Bronson Industries reported a deferred tax liability of $8 million for the year ended December 31, 2017, relatedto a temporary difference of $20 million. The tax rate was 40%. The temporary difference is expected to reversein 2019, at which time the deferred tax liability will become payable. There are no other temporary differences in2017–2019. Assume a new tax law is enacted in 2018 that causes the tax rate to change from 40% to 30% beginning in 2019. (The rate remains 40% for 2018 taxes.) Taxable income in 2018 is $30 million.Required:1. Determine the effect of the change and prepare the appropriate journal entry to record Bronson’s income taxexpense in 2018.2. What adjustment, if any, is needed to revise retained earnings as a result of the change?How much is the excessive tax benefits to be credited to tax expense on January 2, 2019 according to the ASU 2016-09? Answer is $90 million. Please explain the reasoning and calculationsWhat is Target’s liability for unrecognized tax benefits as of January 30, 2016? IfTarget were to prevail in court and realize $50 million more in tax savings than itthought more likely than not to occur, what would be the effect on the liability forunrecognized tax benefits and on net income?
- B Co. reported a deferred tax liability of $26.0 million for the year ended December 31, 2017, related to a temporary difference of $65 million. The tax rate was 40%. The temporary difference is expected to reverse in 2019 at which time the deferred tax liability will become payable. There are no other temporary differences in 2017–2019. Assume a new tax law is enacted in 2018 that causes the tax rate to change from 40% to 30% beginning in 2019. (The rate remains 40% for 2018 taxes.) Taxable income in 2018 is $95 million. Required:Determine the effect of the change and prepare the appropriate journal entry to record B’s income tax expense in 2018.Bronson Industries reported a deferred tax liability of $14.4 million for the year ended December 31, 2017, related to a temporary difference of $36 million. The tax rate was 40%. The temporary difference is expected to reverse in 2019 at which time the deferred tax liability will become payable. There are no other temporary differences in 2017–2019. Assume a new tax law is enacted in 2018 that causes the tax rate to change from 40% to 30% beginning in 2019. (The rate remains 40% for 2018 taxes.) Taxable income in 2018 is $62 million. Required:1. & 2. Determine the type of accounting change and prepare the appropriate journal entry to record Bronson's income tax expense in 2018 and adjustment, if any, is needed to revise retained earnings as a result of the change.Bronson Industries reported a deferred tax liability of $5 million for the year ended December 31, 2020, related to a temporary difference of $20 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax liability will become payable. There are no other temporary differences in 2020–2022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 15% beginning in 2022. (The rate remains 25% for 2021 taxes.) Taxable income in 2021 is $30 million.Required:Determine the effect of the tax rate change and prepare the appropriate journal entry to record Bronson’s income tax expense in 2021. What effect, if any, will enacting the change in the 2022 tax rate have on Bronson’s 2021 net income?
- For many years preceding 2018, Minimis Corporation, a calendar year corporation, had incurred the alternative minimum tax (AMT) and as a result had a $2 million minimum tax carryover into 2018. However, the Tax Cuts and Jobs Act of 2017 repealed the corporate AMT for tax years beginning after 2017. Minimis expects its regular tax liability to be $100,000 per year for 2018, 2019, 2020, and 2021. Your supervisor has asked you to determine how Minimis treats the minimum tax credit carryover in these four years now that the corporate AMT has been repealed. Your supervisor has suggested that you start by looking at IRC Sec. 53.Addison Co. has one temporary difference at the beginningof 2017 of $500,000. The deferred tax liabilityestablished for this amount is $150,000, based on a taxrate of 30%. The temporary difference will provide thefollowing taxable amounts: $100,000 in 2018, $200,000in 2019, and $200,000 in 2020. If a new tax rate for 2020of 20% is enacted into law at the end of 2017, what isthe journal entry necessary in 2017 (if any) to adjustdeferred taxes?Bronson Industries reported a deferred tax liability of $13.5 million for the year ended December 31, 2020, related to a temporary difference of $54 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax liability will become payable. There are no other temporary differences in 2020–2022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 20% beginning in 2022. (The rate remains 25% for 2021 taxes.) Taxable income in 2021 is $128 million.Required:1. Determine the effect of the change and prepare the appropriate journal entry to record Bronson’s income tax expense in 2021.2. Is Bronson required to revise prior years’ financial statements as a result of the change?3. Is Bronson required to provide a disclosure note to report the change?
