Non-Ordinary Items
They are those items that consist of gains and losses on the company’s income statement which are unusual and infrequent in nature.
The tax expense or benefit to the two non-ordinary items.
Answer to Problem 12.4P
Net Tax expenses for value E is
Explanation of Solution
Particulars | Amount in $ |
YTD income (loss) | |
Projected income (loss) | |
Total annual income (loss) | |
Carry forward of 2013 loss | |
Estimated annual taxable income | |
Estimated tax: | |
On first | |
On next | |
On next | |
Remaining income | - |
Less: Tax credit | |
Net tax | |
Effective Rate | |
Tax expense |
Calculation of tax expense:
Effective interest rate
Calculation of tax expense :
Tax expense =Quarter 1 -restated continuing income × effective tax rate
Item C
Tax expense originally reported for quarter 1
Particulars | Amount in $ |
Tax expense (benefit) traceable to restated: | |
Continuing operations | |
Discontinued operations | |
Tax expense originally reported for quarter 1 |
Item D
Tax expense for quarter 2 income from continuing operations:
Particulars | Amount in $ |
Quarter 1 — restated income (loss) | |
Quarter 2 — income (loss) | |
YTD income (loss) | |
Projected income (loss) | |
Total annual income (loss) | |
Carry forward of 2013 loss | |
Estimated annual taxable income | |
Estimated tax: | |
On first | |
On next | |
On next | |
Remaining income | - |
Less: Tax credit | |
Net tax | |
Effective tax rate | |
Tax expense |
Calculation of effective tax rate:
Effective interest rate
Calculation of tax expense:
Tax expense
= Quarter l -restated continuing income x Effective tax rate
Item E
Particulars | Amount in $ |
Quarter 1 - restated | |
Quarter 2: | |
Operating loss | |
Realized loss on disposal | |
Impairment loss | |
Value of E |
ITEM F
Particulars | Ordinary income | Total income | Total excluding Non- ordinary loss | Total excluding Non-ordinary gain | |
Pretax income (loss): | |||||
Continuing | |||||
Discontinued | _ | - | |||
Extraordinary | _ | - | |||
Pretax income | |||||
(loss) | |||||
Tax expense | |||||
(benefit) | |||||
Taxable income: | |||||
Pretax income | |||||
(loss) 2013 loss | |||||
Taxable income | |||||
Estimated tax: On first On next On next Remaining income Less: Tax credit | |||||
- | |||||
Net tax | - |
Incremental tax expense (benefit)
PARTICULARS | AMOUNT IN $ |
Incremental tax expense (benefit) traceable to: | |
All non-ordinary items | |
All non-ordinary losses |
CONCLUSION Net Tax expenses for value E is
Want to see more full solutions like this?
Chapter 12 Solutions
EBK ADVANCED ACCOUNTING
- Barth James Inc. has the following deferred tax assets and liabilities: 12,000 noncurrent deferred tax asset, and 10,500 noncurrent deferred tax liability. Show how Barth James would report these deferred tax assets and liabilities on its balance sheet.arrow_forwardIncomc 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.arrow_forwardQuince Corporation has taxable income of $485,000 for its calendar tax year. Calculate the corporation's income tax liability for 2019 before tax credits. $________________arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning