INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
9th Edition
ISBN: 9781260216141
Author: SPICELAND
Publisher: MCG CUSTOM
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Chapter 16, Problem 16.13E
1.
To determine
Deferred tax is an amount i.e. computed on the basis of tax liability on the income as per income statement and the income as per tax return, that difference is known as deferred tax. Deferred tax amount is deferred to the next financial year.
When the Income Tax Expense account is more than the Income Tax Payable account, this difference is known as Deferred Tax Asset.
When the Income Tax Expense account is less than the Income Tax Payable account, this difference is known as Deferred Tax Liability.
To prepare: The
2.
To determine
SA’s net income for the year 2018.
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Exercise 16-12 (Algo) Deferred tax asset; taxable income given; valuation allowance [LO16-4]
At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $115 million attributable to a temporary book-
tax difference of $460 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $352 million. Payne
has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2024 is $828 million
and the tax rate is 25%.
Required:
1. Prepare the journal entry(s) to record Payne's income taxes for 2024, assuming it is more likely than not that the deferred tax
asset will be realized in full.
2. Prepare the journal entry(s) to record Payne's income taxes for 2024, assuming it is more likely than not that only one-fourth of
the deferred tax asset ultimately will be realized.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare the journal entry(s) to…
Exercise 16-5 (Algo) Taxable income given; calculate deferred tax liability from book-tax difference;
100% depreciation in the year of purchase; financial statement effects [LO16-2]
Ayres Services acquired an asset for $80 million in 2024. The asset is depreciated for financial reporting purposes over four years on
a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2024. The enacted tax rate
is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2024, 2025, 2026, and 2027 are as follows:
2024
($ in millions)
2025
2026
2027
Pretax accounting income
$ 370
$ 390
Depreciation on the income statement
20
20
$ 405
20
Depreciation on the tax return
(80)
(0)
(0)
$ 440
20
(8)
$ 310
$ 410
$ 425
$ 460
Taxable income
Required:
For December 31 of each year, determine (a) the cumulative temporary book-tex difference for the depreciable asset and (b) the
balance to be reported in the deferred tax liability account.…
Problem 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]
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[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…
Chapter 16 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
Ch. 16 - Prob. 16.1QCh. 16 - A deferred tax liability (or asset) is described...Ch. 16 - Prob. 16.3QCh. 16 - Prob. 16.4QCh. 16 - Temporary differences result in future taxable or...Ch. 16 - Identify three examples of differences with no...Ch. 16 - The income tax rate for Hudson Refinery has been...Ch. 16 - Suppose a tax reform bill is enacted that causes...Ch. 16 - A net operating loss occurs when tax-deductible...Ch. 16 - Prob. 16.10Q
Ch. 16 - Additional disclosures are required pertaining to...Ch. 16 - Additional disclosures are required pertaining to...Ch. 16 - Prob. 16.13QCh. 16 - Prob. 16.14QCh. 16 - IFRS and U.S. GAAP follow similar approaches to...Ch. 16 - Temporary difference LO161 A company reports...Ch. 16 - Prob. 16.2BECh. 16 - Temporary difference LO162 A company reports...Ch. 16 - Prob. 16.4BECh. 16 - Temporary difference; income tax payable given ...Ch. 16 - Valuation allowance LO162, LO163 At the end of...Ch. 16 - Valuation allowance LO162, LO163 VeriFone Systems...Ch. 16 - Temporary and permanent differences; determine...Ch. 16 - Calculate taxable income LO161, LO164 Shannon...Ch. 16 - Multiple tax rates LO165 J-Matt, Inc., had pretax...Ch. 16 - Change in tax rate LO165 Superior Developers...Ch. 16 - Net operating loss carryforward LO167 During its...Ch. 16 - Net operating loss carryback LO167 AirParts...Ch. 16 - Tax uncertainty LO169 First Bank has some...Ch. 16 - Intraperiod tax allocation LO1610 Southeast...Ch. 16 - Temporary difference; taxable income given LO161...Ch. 16 - Prob. 16.2ECh. 16 - Prob. 16.3ECh. 16 - Prob. 16.4ECh. 16 - Prob. 16.5ECh. 16 - Prob. 16.6ECh. 16 - Identify future taxable amounts and future...Ch. 16 - Calculate income tax amounts under various...Ch. 16 - Determine taxable income LO161, LO162 Eight...Ch. 16 - Prob. 16.10ECh. 16 - Deferred tax asset; income tax payable given;...Ch. 16 - Prob. 16.12ECh. 16 - Prob. 16.13ECh. 16 - Multiple differences LO164, LO166 For the year...Ch. 16 - Multiple t ax rates LO162, LO165 Allmond...Ch. 16 - Prob. 16.16ECh. 16 - Deferred taxes; change in tax rates LO161, LO165...Ch. 16 - Multiple temporary differences; record income...Ch. 16 - Multiple temporary differences; record income...Ch. 16 - Net operating loss carryforward LO167 During...Ch. 16 - Net operating loss carryback LO167 Wynn Sheet...Ch. 16 - Net operating loss carryback and carryforward ...Ch. 16 - Identifying income tax deferrals LO161, LO162,...Ch. 16 - Multiple temporary differences; balance sheet...Ch. 16 - Multiple tax rates LO161, LO164, LO165 Case...Ch. 16 - Prob. 16.26ECh. 16 - Balance sheet classification LO168 As of December...Ch. 16 - Concepts; terminology LO161 through LO168 Listed...Ch. 16 - Tax credit; uncertainty regarding sustainability ...Ch. 16 - Intraperiod tax allocation LO1610 The following...Ch. 16 - FASB codification research LO165, LO168, LO1610...Ch. 16 - Prob. 16.1PCh. 16 - Prob. 16.2PCh. 16 - Prob. 16.3PCh. 16 - Prob. 16.4PCh. 16 - Change in tax rate; record taxes for four years ...Ch. 16 - Multiple differences; temporary difference yet to...Ch. 16 - Multiple differences; calculate taxable income;...Ch. 16 - Multiple differences; taxable income given; two...Ch. 16 - Determine deferred tax assets and liabilities ...Ch. 16 - Prob. 16.10PCh. 16 - Prob. 16.11PCh. 16 - Prob. 16.12PCh. 16 - Prob. 16.13PCh. 16 - Prob. 16.1BYPCh. 16 - Prob. 16.2BYPCh. 16 - Integrating Case 163 Tax effects of accounting...Ch. 16 - Communication Case 164 Deferred taxes; changing...Ch. 16 - Prob. 16.5BYPCh. 16 - Research Case 166 Researching the way tax...Ch. 16 - Analysis Case 167 Reporting deferred taxes; Ford...Ch. 16 - Prob. 16.8BYPCh. 16 - Judgment Case 169 Analyzing the effect of deferred...Ch. 16 - Prob. 16.12BYPCh. 16 - Target Case LO16-1, LO16-2, LO16-4, LO16-8,...Ch. 16 - Prob. 1CCIFRS
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