E19.17 (LO 1, 2, 4) (Two Differences, One Rate, BeginningDeferred Balance, Compute Pretax Financial Income) Luo Ltd.establishes a ¥9o million liability at the end of 2022 for the estimatedlitigation settlement for manufacturing defects. All related costs will bepaid and deducted on the tax return in 2023. Also, at the end of 2022, thecompany has ¥50 million of temporary differences due to excessdepreciation for tax purposes, ¥7 million of which will reverse in 2023.The enacted tax rate for all years is 40%, and the company pays taxes of¥64 million on ¥160 million of taxable income in 2022. Luo expects to havetaxable income in 2023.Instructionsa. Determine the deferred taxes to be reported at the end of 2022.b. Indicate how the deferred taxes computed in (a) are to be reported onthe statement of financial position.c. Assuming that the only deferred tax account at the beginning of 2022was a deferred tax liability of ¥10,000,000, draft the income taxexpense portion of the income statement for 2022, beginning with theline "Income before income taxes." (Hint: You must first compute (1)the amount of temporary difference underlying the beginning¥10,000,000 deferred tax liability, then (2) the amount of temporarydifferences originating or reversing during the year, and then (3) theamount of pretax financial income.)

Answered: liability at the end manufacturing defe…

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liability at the end manufacturing defe e tax return in 2023- n of temporary diffe oses, ¥7 million of

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

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 6RE: Suppose that Blake Companys total pretax difference from a change to FIFO was 100,000 and the...

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DD Co. established a P90 million liability at the end of 2020 for the estimated litigation settlement for manufacturing defects. All related costs will be paid and deducted on the tax return in 2021. Also at the end of 2020, the company has P50 million of temporary differences due to excess depreciation for tax purposes, P7 million of which will reverse in 2021. The enacted tax rate for all years is 40%, and the company pays taxes of P64 million on P160 million of taxable income in 2020. DD expects to have taxable income in 2021. Determine the deferred tax asset to be reported at the end of 2021.
DD Co. established a P90 million liability at the end of 2020 for the estimated litigation settlement for manufacturing defects. All related costs will be paid and deducted on the tax return in 2021. Also at the end of 2020, the company has P50 million of temporary differences due to excess depreciation for tax purposes, P7 million of which will reverse in 2021. The enacted tax rate for all years is 40%, and the company pays taxes of P64 million on P160 million of taxable income in 2020. DD expects to have taxable income in 2021. Determine the deferred tax liability to be reported at the end of 2021.
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As of December 31, 2022, its first year of operations, Batangas Company had taxable temporary differences totaling P3,000,000. Of this total, P1,000,000 relates to current items. Batangas also had deductible temporary differences totaling P1,500,000, P250,000 of which relates to current items. Pretax financial income for the year was P20,000,000. The income tax rate is 35%. How much income tax payable should Batangas Company report on December 31, 2022?
During 2026, Raven Company became involved in a tax dispute with BIR. At December 31, 2026, Raven’s tax advisor believed that an unfavorable outcome was probable and a reasonable estimate of additional taxes was P5,000,000 but could be as much as P6,500,000. After the 2026 financial statements were issued, Raven received and accepted a BIR settlement offer of P5,500,000. Assume that the company accepted the BIR settlement offer of P5,500,000 before the 2026 financial statements were issued, what amount of accrued liability would Raven have reported in its December 31, 2026 statement of financial position?
On January 1, 2024, Hampton's Construction, Inc. decided to change from the completed-contract method of accounting to the percentage-of-completion method. Hampton will continue to use the completed-contract method for income tax purposes. The following information is available for net income. The income tax rate for all years is 35%.Net Income Year Ended Percentage of Completion Completed Contract December 31, 2022 $145,000 $125,000 December 31, 2023 179,000 159,000 December 31, 2024 267,000 181,000 What is the journal entry to record the change in accounting principle on January 1, 2024? Group of answer choices Retained Earnings 55,900 Deferred Tax Asset 30,100 Construction in Progress86,000 Construction in Progress 40,000 Retained Earnings 40,000 No entry needed. Construction in Progress 40,000 Deferred Tax Liability 14,000 Retained Earnings26,000
During the preparation of financial statement for Master Ltd for 2023 it was discovered thatan amount of $22,000, incurred in September 2021 and payable to an overseas supplier, wasoverlooked and not paid or provided for in the financial statement ending 30 June 2022. Theamount is considered to be material and will be permitted as a deduction for tax purposes(tax rate 30%).Required:i) Prepare the necessary journal entry to correct this error.
At December 31, 2022 Mindoro Corporation’s taxable profit is P5,000,000. The following items are the temporary differences that caused Mindoro’s income in the income tax return to differ from the amount reported in the income statement: Future deductible amounts expected to reverse in 2023 of P400,000 and future taxable amounts expected to reverse in 2023 and 2024 of P500,000 and P900,000, respectively. Mindoro’s income tax rate is 35%. The income tax expense reported by Mindoro in its December 31, 2022 income statement is a. P2,100,000 c. P1,750,000 b. P1,400,000 d. P1,785,000
E18-4 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 Fulhage’s income tax journal entry at the end of 2019.