Change in tax rate
• LO16–5
Superior Developers sells lots for residential development. When lots are sold, Superior recognizes income for financial reporting purposes in the year of the sale. For some lots, Superior recognizes income for tax purposes when collected. In the prior year, income recognized for financial reporting purposes for lots sold this way was $20 million, which would be collected equally over the next two years. The enacted tax rate was 40%. This year, a new tax law was enacted, revising the tax rate from 40% to 35% beginning next year. Calculate the amount by which Superior should reduce its
Want to see the full answer?
Check out a sample textbook solutionChapter 16 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
Additional Business Textbook Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Financial Accounting, Student Value Edition (4th Edition)
Introduction To Managerial Accounting
PRINCIPLES OF TAXATION F/BUS.+INVEST.
- Problem 06-06 (Algo) [LO 6-5] Besito Company, a calendar year, cash basis taxpayer, leases lawn and garden equipment. During December, it received the following cash payments. To what extent does each payment represent current taxable income to Besito? Required: a. $1,092 repayment of a loan from an employee. Besito loaned $1,050 to the employee six months ago, and the employee repaid the loan with interest. b. $1,150 deposit from a customer who rented mechanical equipment. Besito must return the entire deposit when the customer returns the undamaged equipment. c. $11,100 short-term loan from a local bank. Besito gave the bank a written note to repay the loan in one year percent interest. d. $814 prepaid rent from the customer described in part (b). The rent is $11 per day for the 74-day period from December 17 through February 28. For all requirements, leave no cells blank - be certain to enter "0" wherever required. a. Taxable income b. Taxable income c. Taxable income d. Taxable…arrow_forwardProblem 16-8 (Algo) Multiple differences; taxable income given; two years; balance sheet classification; change in tax rate [LO16-1, 16-2, 16-3, 16-5, 16-6, 16-8] Skip to question [The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 936 $ 1,028 Expenses 792 848 Pretax accounting income (income statement) $ 144 $ 180 Taxable income (tax return) $ 108 $ 214 Tax rate: 25% Expenses each year include $54 million from a two-year casualty insurance policy purchased in 2021 for $108 million. The cost is tax deductible in 2021. Expenses include $2 million insurance premiums each year for life insurance on key executives. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2021 and 2022 were $55 million and $71 million, respectively. Subscriptions included in 2021 and…arrow_forwardProblem 16-8 (Algo) Multiple differences; taxable income given; two years; balance sheet classification; change in tax rate [LO16-1, 16-2, 16-3, 16-5, 16-6, 16-8] Skip to question [The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 936 $ 1,028 Expenses 792 848 Pretax accounting income (income statement) $ 144 $ 180 Taxable income (tax return) $ 108 $ 214 Tax rate: 25% Expenses each year include $54 million from a two-year casualty insurance policy purchased in 2021 for $108 million. The cost is tax deductible in 2021. Expenses include $2 million insurance premiums each year for life insurance on key executives. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2021 and 2022 were $55 million and $71 million, respectively. Subscriptions included in 2021 and…arrow_forward
- Comprehensive Tax Problem - Part 2 In 2024, the Pretax financial income was $825,000, which includes $30,000 of municipal bond income. On June 1, 2024, an unexpected tax rate change occurred, causing the 2024 (and beyond) tax rates to increase to 28%. 1. In addition to the above temporary differences listed in 2023, on Sept 31, 2024, Price Corp purchased equipment for $325,000 (salvage value of $25,000, and a 4-year useful life). The table below lists depreciation for TAX purposes. Year 2024 2025 2026 2027 2028 Depreciation Schedule (TAXES) 75,000 120,000 50,000 35,000 20,000 2. Price has updated its valuation allowance, and determined that it is more likely than not, that 5% of any DTA will not be realized. Prepare the journal entry for 2024 to record Income Tax Expense.arrow_forwardLO.2 Oak Corporation has the following general business credit carryovers. If the general business credit generated by activities during 2019 equals 36,000 and the total credit allowed during the current year is 60,000 (based on tax liability), what amounts of the current general business credit and carryovers are utilized against the 2019 income tax liability? What is the amount of unused credit carried forward to 2020?arrow_forwardLO.5 Beige Corporation has a fiscal year ending April 30. For the year ending April 30, 2018, Beige generated taxable income of 1,200,000. What is Beige Corporations tax liability for this period?arrow_forward
- Problem 17-32 (Algorithmic) (LO. 6) Wan's AGI last year was $274,000. Her Federal income tax came to $82,200, paid through both withholding and estimated payments. This year, her AGI will be $411,000, with a projected tax liability of $61,650, all to be paid through estimates. Wan wants to pay the least amount of tax during the year that does not incur a penalty. If required, round intermediate calculations to two decimal place and your final answer to the nearest dollar. a. Compute Wan's total estimated tax payments for this year. Under the current-year method: $ Under the prior-year method: b. Assume instead that Wan's AGI last year was $92,000 and resulted in a Federal income tax of $18,400. Determine her total estimated tax payments for this year. Under the current-year method: $ Under the prior-year method: $arrow_forwardF7 A certain state uses the following progressive tax rate for calculating individual income tax: 7 ht©2003-2022 International Academy of Science. All Rights Reserved. F8 0-10,000 3% 10,001 - 50,000 5% 50,001 - 100,000 5.5% Calculate the state income tax owed on a $90,000 per year salary. tax = $[?] Round your answer to the nearest whole dollar amount. F9 Income Range ($) h 8 9. prtsc F10 home F11 Progressive Tax Rate . F12 + 11. delete Enter Backspace Num Lock CE 9:07. 11/5/20 +1_arrow_forward60 00 Chuck, a single taxpayer, earns $76,300 in taxable income and $11,500 in interest from an investment in City of Heflin bonds (Use U.S. tax rate schedule.) Required: a. If Chuck earns an additional $40,000 of taxable income, what is his marginal tax rate on this income? b. What is his marginal rate if, instead, he had $40,000 of additional deductions? (For all requirements, do not round intermediate calculations. Round percentage answers to 2 decimal places.) a. Marginal tax rate % b. Marginal tax rate 62 F re to search F7 F5 +Do F4 F1 F2 & 23 3. 24 4. R. G W N C.arrow_forward
- Exercise 16-6 (Algo) Temporary difference; income tax payable given [LO16-3] In 2024, DFS Medical Supply collected rent revenue for 2025 tenant occupancy. For income tax reporting, the rent is taxed when collected. For financial statement reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy the rental property. The deferred portion of the rent collected in 2024 amounted to $390,000 at December 31, 2024. DFS had no temporary differences at the beginning of the year. Required: Assuming an income tax rate of 25% and 2024 income tax payable of $940,000, prepare the journal entry to record income taxes for 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheetarrow_forwardQuestion 11 The 2021 standard deduction is $12,600 and deductions for state and local taxes are limited to $10,000. You are already choosing to itemize your deductions becaue of charitible contributions. You expect to pay $8,000 of state income taxes in 2021 and you are looking at the tax benefits associated with purchasing a single family home as your primary residence. You estimate that the mortgage interest in 2021 will be $21,000 and the property taxes will be $2,000. What is the tax benefit associated with homeownership if your marginal tax rate is 22%? redarrow_forward7. After real estate has been sold by the state or the 6. What is the annual real estate tax on a property B. remain indefinitely in possession of the A. refinance the parcel of property sold. valued at $135,000 and assessed for tax purpos STIONS an at $47,250 with an equalization factor of 125% and a tax rate of 25 mills? A. $1,181 B. $1,477 C. $3,375 D. $4,219 7. After real estate has been sold by the state of u county to satisfy a delinquent real estate tax depending on state law, the former owner i have the right to A. refinance the parcel of property e propertyarrow_forward
- PFIN (with PFIN Online, 1 term (6 months) Printed...FinanceISBN:9781337117005Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage LearningIndividual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT