On December 31, 2021
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- Bramble Corp. had a Deferred Tax Asset account with a balance of $100,200 at the end of 2019 due to a single temporary difference of $334,000 related to warranty liability accruals. At the end of 2020, this same temporary difference has increased to $368,500. Taxable income for 2020 is $919,000. The tax rate is 30% for all years. Assuming that it is more likely than not that $29,500 of the deferred tax asset will not be realized, prepare the journal entries to record income taxes for 2020. Bramble uses a valuation allowance account. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Year Account Titles and Explanation Debit Credit 2020 (To record current tax expense) 2020 (To record deferred tax benefit) 2020 (To bring the deferred tax assets account to its realizable value)Blossom Corporation has a deferred tax asset at December 31, 2022 of $ 250000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 30% for 2019–2021; 25% for 2022; and 20% for 2023 and thereafter. Assuming that management expects that only 50% of the related benefits will actually be realized, a valuation account should be established in the amount of:At the end of 2021, a company has a deferred tax asset with a balance of $480,000.The company has a valuation allowance account related to the deferred tax asset. The valuation account has a balance of $205,000 at the beginning of 2021. If it is more likely than not that all of the deferred tax asset will be realized, then (enter the number that represents the correct answer): income tax expense will be debited by $205,000. income tax expense will be credited by $205,000. deferred tax asset will be debited by $275,000 the valuation account will be credited by $205,000.
- Lindemax Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. (Assume the carryback provision is used for a net operating loss.) The tax rates listed were all enacted by the beginning of 2018. Instructions a) Prepare the journal entries for 2020 and 2021, assuming that based on the weight of available evidence, it is probable that one-fourth of the benefits of the loss carryforward will not be realized.At December 31, 2020, Sheridan Corporation has a deferred tax asset of $180,000. After a careful review of all available evidence, it is determined that it is more likely than not that $54,000 of this deferred tax asset will not be realized.Prepare the necessary journal entry. (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 CreditCullumber Construction Company changed from the completed-contract to the percentage-of-completion method of accounting for long-term construction contracts during 2021. For tax purposes, the company employs the completed-contract method and will continue this approach in the future. (Hint: Adjust all tax consequences through the Deferred Tax Liability account.) The appropriate information related to this change is as follows. 2020 2021 Pretax Income from: Percentage-of-Completion Net income $ $727,000 644,000 Completed-Contract $561.000 450,000 Difference $166,000 194,000 (a) Assuming that the tax rate is 40%, what is the amount of net income that would be reported in 2021? (b) What entry is necessary to adjust the accounting records for the change in accounting principle? (Credit account titles ore automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Account Titles and…
- At December 31, 2019, Sunland Company had a net deferred tax liability of $361,200. An explanation of the items that compose this balance is as follows. Temporary Differences Resulting Balancesin Deferred Taxes1. Excess of tax depreciation over book depreciation $186,400 2. Accrual, for book purposes, of estimated loss contingency frompending lawsuit that is expected to be settled in 2020. The losswill be deducted on the tax return when paid. (52,000)3. Accrual method used for book purposes and installment methodused for tax purposes for an isolated installment sale of an investment. 226,800 $361,200 In analyzing the temporary differences, you find that $29,100 of the depreciation temporary difference will reverse in 2020, and $127,800 of the temporary difference due to the installment sale will reverse in 2020. The tax rate for all years is 20%. Indicate the manner in which deferred taxes should be presented on Sunland Company’s December 31, 2019, balance sheet.Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2021. Assume Fore will carry back its NOL to prior years. 2. What is the net operating loss reported in 2021 income statement? 3. Prepare the journal entry to record income taxes in 2022 assuming pretax accounting income is $288 million. No additional temporary differences originate in 2022.Ivanhoe Corporation has a deferred tax asset at December 31, 2026 of $210000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 30% for 2023-2025; 25% for 2026; and 20% for 2027 and thereafter. Assuming that management expects that only 50% of the related benefits will be realized, a valuation account should be established in the amount of O $36750. O $31500. O $105000. O $42000. of
- Shwonson Industries reported a deferred tax asset of $5.50 million for the year ended December 31, 2020, related to a temporary difference of $22 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax asset will reduce taxable income. 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 $32 million. Required: 1. Prepare the appropriate journal entry to record Shwonson's income tax expense in 2021. 2. What effect, will enacting the change in the 2022 tax rate, have on Shwonson's 2021 net income? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the appropriate journal entry to record Shwonson's income tax expense in 2021. (If no entry is required for a transaction/event, select "No journal entry…Shwonson Industries reported a deferred tax asset of $9.75 million for the year ended December 31, 2020, related to a temporary difference of $39 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax asset will reduce taxable income. 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 $49 million. Required:1. Prepare the appropriate journal entry to record Shwonson’s income tax expense in 2021.2. What effect, will enacting the change in the 2022 tax rate, have on Shwonson’s 2021 net income?Drew Company has a deferred tax asset of $54,000 before recording an allowance of $7000 for estimating it is more likely than not that this amount will not be realized in the future. The result of recording this allowance is The deferred tax asset will now be a net amount of $47,000 Income tax expense will be reduced by $7000 x the tax rate. Income tax expense will be increased by $7000 x the tax rate. Net income will be increased by $7000.