Multiple tax rates
• LO16–1, LO16–4, LO16–5
Case Development began operations in December 2018. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2018 installment income was $600,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2019–2021 are as follows:
2019 | $150,000 | 30% |
2020 | 250,000 | 40 |
2021 | 200,000 | 40 |
Pretax accounting income for 2018 was $810,000, which includes interest revenue of $10,000 from municipal bonds. The enacted tax rate for 2018 is 30%.
Required:
1. Assuming no differences between accounting income and taxable income other than those described above, prepare the appropriate
2. What is Case’s 2018 net income?
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GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
- 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_forwardProblem 16-13 (IFRS) tax rate is 30%. P450,000 and no deferred tax liability. provision of P500,000 The deferred tax asset was due to a time it was tax deductible. P1,000,000 collected in 2019 but earned only in 2020. recognized each Life insurance premiums of P200,000 were year on key officers for 2020 and 2021. The entity paid for a two-year casualty insurance for P6,000,000 on January 1, 2020. The entire premium is tar deductible when paid. The entity collected rent from leasing some of its equipment. The rent is recognized as revenue when earned but taxable when collected. 2020 2021 3,300,000 2,500,000 3,500,000 3,300,000 Rent collected Rent earned The entity had trading investments. All gains and losses are recognized for tax purposes when the investments are sold. During 2020, the entity recognized P1,700,000 unrealized losses on trading investments which were sold in 2021. Required: 1. Compute taxable income for 2020 and 2021. 2. Compute current tax expense and total tax expense…arrow_forwardExercise 19.8 (Two Temporary Differences, One rate, 3 years). Button Company has the following two temporary differences between its income tax expense and income taxes payable. 2020 2021 2022 Pretax Financial Income $840,000 $910,000 $945,000 Excess Depreciation Expense on tax Return (30,000) (40,000) (10,000) Excess Warranty Expense in Financial Income 20,000 10,000 8,000 Taxable Income $830,000 $880,000 $943,000 The income tax rate is 20% for all years. Instructions: a) Assuming there were no temporary differences prior to 2020, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020,2021, and 2022. b) Indicate how deferred taxes will be reported on the 2022 balance sheet. Button’s product warranty is for 12 months. Deferred tax asset ( $ 0 + $ 0 + $ 0 )..............................$ 0 Deferred tax liability ( $ 0 + $ 0 + $ 0…arrow_forward
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- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT