Pine Ltd is reviewing its deferred tax for the year. In each of the following situations prepare the end-of-period adjustment journal entries to account for income tax on the initial appearance or reversal of any temporary differences. Explain in each case why particular accounts are affected. The company purchased a depreciable asset at the beginning of the year for $200000. For accounting purposes, an annual depreciation rate of 20% straight-line is used, whereas for taxation the rate is 30% straight-line. The company’s provision for long-service leave at the beginning and end of the year are $80000 and $77 500 respectively. In the current year, $10000 in long-service leave was paid to a long-standing employee.
Pine Ltd is reviewing its deferred tax for the year. In each of the following situations prepare the end-of-period adjustment journal entries to account for income tax on the initial appearance or reversal of any temporary differences. Explain in each case why particular accounts are affected. The company purchased a depreciable asset at the beginning of the year for $200000. For accounting purposes, an annual depreciation rate of 20% straight-line is used, whereas for taxation the rate is 30% straight-line. The company’s provision for long-service leave at the beginning and end of the year are $80000 and $77 500 respectively. In the current year, $10000 in long-service leave was paid to a long-standing employee.
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 4MC: Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the...
Related questions
Question
Pine Ltd is reviewing its
- The company purchased a
depreciable asset at the beginning of the year for $200000. For accounting purposes, an annual depreciation rate of 20% straight-line is used, whereas fortaxation the rate is 30% straight-line.
- The company’s provision for long-service leave at the beginning and end of the year are $80000 and $77 500 respectively. In the current year, $10000 in long-service leave was paid to a long-standing employee.
- The company has interest receivable of $25 000 at the end of the year. No interest was receivable at the beginning of the year. Interest income is included in taxable profit only when received.
- The company has revalued land at the end of the year. The land was revalued during the year from its original cost of $150 000 to a fair value of $250 000.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning