Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: SITUATION Taxable income Amounts at year-end: Future deductible amounts Future taxable amounts Balances at beginning of year: Deferred tax asset Deferred tax liability 1 2 $100,000 $130,000 0 10,000 0 2,000 The enacted tax rate is 25% for both situations. 10,000 15,000 $2,000 0 Required: For each situation determine the: (a.) Income tax payable currently. (b.) Deferred tax asset - balance at year-end. (c.) Deferred tax asset change dr or (cr) for the year. (d.) Deferred tax liability - balance at year-end. (e.) Deferred tax liability change dr or (cr) for the year. (f.) Income tax expense for the year.
Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: SITUATION Taxable income Amounts at year-end: Future deductible amounts Future taxable amounts Balances at beginning of year: Deferred tax asset Deferred tax liability 1 2 $100,000 $130,000 0 10,000 0 2,000 The enacted tax rate is 25% for both situations. 10,000 15,000 $2,000 0 Required: For each situation determine the: (a.) Income tax payable currently. (b.) Deferred tax asset - balance at year-end. (c.) Deferred tax asset change dr or (cr) for the year. (d.) Deferred tax liability - balance at year-end. (e.) Deferred tax liability change dr or (cr) for the year. (f.) Income tax expense for the year.
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 8E: Incomc Taxes Then Company has been in operation for several years. It has both a deductible and a...
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Transcribed Image Text:Two independent situations are described below. Each involves future deductible amounts and/or future taxable
amounts produced by temporary differences:
SITUATION
Taxable income
Amounts at year-end:
Future deductible amounts
Future taxable amounts
Balances at beginning of year:
Deferred tax asset
Deferred tax liability
1
2
$100,000 $130,000
0
10,000
0
2,000
The enacted tax rate is 25% for both situations.
10,000
15,000
$2,000
0
Required:
For each situation determine the:
(a.) Income tax payable currently.
(b.) Deferred tax asset - balance at year-end.
(c.) Deferred tax asset change dr or (cr) for the year.
(d.) Deferred tax liability - balance at year-end.
(e.) Deferred tax liability change dr or (cr) for the year.
(f.) Income tax expense for the year.
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