The information that follows pertains to Richards Refrigeration, Inc.:a. At December 31, 2021, temporary differences existed between the financial statement book values andthe tax bases of the following:($ in millions)Future TaxableBookValueТаx(Deductible)BasisAmountBuildings and equipment (net of accumulateddepreciation)Prepaid insuranceLiability-loss contingency$146$103$$ 43636338(38)b. No temporary differences existed at the beginning of 2021.c. Pretax accounting income was $213 million and taxable income was $145 million for the year endedDecember 31, 2021. The tax rate is 25%.Required:1. Complete the following table given below and prepare the appropriateto record incometaxes for 2021.2. What is the 2021 net income?Complete this question by entering your answers in the tabs below.Required 1CalculationRequired 1 G)Required 2Complete the following table given below to record income taxes for 2021. (Enter your answers in millions rounded to 2 decimal places(i.e., 5,500,000 should be entered as 5.50). Negative amounts should be entered with a minus sign.)(S in millions)Tax Rate %Tax $Recorded as:Pretax accounting income$213.00Permanent differencesIncome subject to taxation213.00$0.00 Required:1. Complete the following table given below and prepare the appropriate journal entry to record incometaxes for 2021.2. What is the 2021 net income?Complete this question by entering your answers in the tabs below.Required 1CalculationRequired 1 GJRequired 2Complete the following table given below to record income taxes for 2021. (Enter your answers in millions rounded to 2 decimal places(i.e., 5,500,000 should be entered as 5.50). Negative amounts should be entered with a minus sign.)(S in millions)Tax Rate %Тax $Recorded as:XPretax accounting income$213.00Permanent differencesIncome subject to taxation213.002$0.00Temporary DifferencesDepreciation=Prepaid insurance%3DLiability - loss contingencyIncome taxable in current year$213.00< Required 1 CalculationRequired 1 GJ >

Tax Liability- Tax liability refers to the liability which is payable by the assessee to the…

The information that follows pertains to Richards Refrigeration, Inc.: a. At December 31, 2021, temporary differences existed between the financial statement book values and the tax bases of the following: ($ in millions) Future Taxable Вook Таx (Deductible) Value Basis Amount Buildings and equipment (net of accumulated depreciation) Prepaid insurance Liability-loss contingency $146 $103 $ 43 63 63 38 (38) b. No temporary differences existed at the beginning of 2021. c. Pretax accounting income was $213 million and taxable income was $145 million for the year ended December 31, 2021. The tax rate is 25%. Required: 1. Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2021. 2. What is the 2021 net income?

The information that follows pertains to Richards Refrigeration, Inc.: a. At December 31, 2021, temporary differences existed between the financial statement book values and the tax bases of the following: ($ in millions) Future Taxable Вook Таx (Deductible) Value Basis Amount Buildings and equipment (net of accumulated depreciation) Prepaid insurance Liability-loss contingency $146 $103 $ 43 63 63 38 (38) b. No temporary differences existed at the beginning of 2021. c. Pretax accounting income was $213 million and taxable income was $145 million for the year ended December 31, 2021. The tax rate is 25%. Required: 1. Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2021. 2. What is the 2021 net income?

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 4P: Interperiod Tax Allocation Klerk Company had four temporary differences between its pretax financial...

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Incomc Taxes Then Company has been in operation for several years. It has both a deductible and a taxable temporary difference. At the beginning of 2019, its deferred tax asset was 690, and its deferred tax liability was 750. The company expects its lutine deductible amount to be deductible in 2020 and its Inline taxable amount to 1 taxable in 2021. In 2018, Congress enacted income tax rates for future years as follows: 2019, 30%; 2020, 34%; and 2021, 35%. At the end of 2019, Then reported income taxes payable of 25,800, an increase in its deferred tax liability of 300, and an ending balance in its deferred tax asset of 860. Thun has prepared the following schedule of items related to its income taxes for 2019. Required: Fill in the blanks in the preceding schedule. Show your calculations.
Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the amount of financial depreciation, resulting in a book value of the depreciable assets of 24,500 for financial reporting purposes and of 20,000 for tax purposes at the end of 2019. In addition, Shadrach recognized a 3,500 estimated liability for legal expenses in the financial statements during 2019; it expects to pay this liability (and deduct it for tax purposes) in 2023. The current tax rate is 30%, no change in the tax rate has been enacted, and the company expects to be profitable in future years. What is the amount of the net deferred tax liability at the end of 2019? a. 300 b. 450 c. 1,050 d. 1,350
Interperiod Tax Allocation Klerk Company had four temporary differences between its pretax financial income and its taxable income during 2019 as follows: At the beginning of 2019, Klerk had a deferred tax liability of 84,300 related to Temporary Difference #2 and a deferred tax asset of 21,090 related to Temporary Difference #4. Based on its tax records, Klerk earned taxable income of 270,000 for 2019. Kerks accountant has prepared the following schedule showing the total future taxable and deductible amounts at the end of 2019 for its four temporary differences: The company has a history of earning income and expects to be profitable in the future. The income tax rate for 2019 is 40%, but in 2018 Congress enacted a 30% tax rate for 2020 and future years. During 2019, for financial accounting purposes, Klerk reported revenues of 750,000 and expenses of 447,100. The deferred taxes related to Temporary Differences #1, #2, and #4 are considered to be noncurrent by the company; the deferred tax related to Temporary Difference #3 is considered to be current. Required: 1. Prepare Klerks income tax journal entry for 2019. 2. Prepare a condensed 2019 income statement for Klerk. 3. Show how the income tax items are reported on Klerks December 31, 2019, balance sheet.
Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions. 1. The deferred tax consequences of future deductible amounts and operating loss carryforwards 2. A difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively 3. Temporary difference that results in taxable amounts in future years when the related asset or liability is recovered or settled, respectively 4. The future effects on income taxes, as measured by the applicable enacted tax rate and provisions of the enacted tax low, resulting from temporary differences and operating loss carryforwards at the end of the current year 5. The change during the year in a corporations deferred tax liabilities and assets 6. The deferred tax consequences of future taxable amounts 7. The portion of o deferred tax asset for which it is more likely than not that a tax benefit will not be realized 8. Temporary difference that results in deductible amounts in future years when the related asset or liability is recovered or settled, respectively 9. The sum of income tax payable and deferred tax expense (or benefit) 10. The amount of income taxes paid or payable (or refundable) for the current year 11. An excess of tax deductible expenses over taxable revenues in a year that may be carried forward to reduce taxable income in a future year 12. The excess of taxable revenues over tax deductible expenses and exemptions for the year 13. Income tax expense divided by income before income taxes
Interperiod Tax Allocation Peterson Company has computed its pretax financial income to be 66,000 in 2019 after including the effects of the appropriate items from the following information: Petersons accountant has prepared the following schedule showing the future taxable and deductible amounts at the end of 2019 for its three temporary differences: At the beginning of 2019, Peterson had a deferred tax liability of 12,540 related to the depreciation difference and 4,710 related to the accrual-basis sales difference. In addition, it had a deferred tax asset of 14,850 related to the warranty difference. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. Required: 1. Compute Petersons taxable income for 2019. 2. Prepare Petersons income tax journal entry for 2019 (assume no valuation allowance is necessary). 3. Next Level Identify the permanent differences in Items 1 through and explain why you did or did not account for them as deferred tax items in Requirement 2.
Tayla Corporation generated $400,000 of taxable income in the 2019. What is Tayla's corporate tax liability? $71,400 $84,000 $115,600 $0 None of the above
Ironwood Corporation has ordinary taxable income of $65,000 in 2019, and a short-term capital loss of $15,000. What is the corporation's tax liability for 2019? $7,500 $5,250 $10,500 $13,650 None of the above
At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?