CONNECT F/ INTERMEDIATE ACCTING>I<
10th Edition
ISBN: 9781260951585
Author: SPICELAND
Publisher: MCG
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Textbook Question
Chapter 16, Problem 16.26E
Identifying income tax deferrals
• LO16–1, LO16–2, LO16–4, LO16–7
Listed below are ten independent situations. For each situation indicate (by letter) whether it will create a
Situation
_______ 1. Advance payments on insurance, deductible when paid
_______ 2. Estimated warranty costs; tax deductible when paid
_______ 3. Rent revenue collected in advance; cash basis for tax purposes
_______ 4. Interest received from investments in municipal bonds
_______ 5. Prepaid expenses, tax deductible when paid
_______ 6. Net operating loss carryforward
_______ 7. Net operating loss carryback
_______ 8. Straight-line
_______ 9. Organization costs expensed when incurred; tax deductible over 15 years
_______ 10. Life insurance proceeds received upon the death of the company president
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Question No.4
a) The U.S. currently has seven federal income tax brackets, with rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%. If you fall into the 37% bracket, that doesn’t mean that the entirety of your taxable income will be subject to a 37% tax. Instead, 37% is your top marginal tax rate.
FEDERAL TAX BRACKETS 2018 – 2019
Tax rate (%)
$0 – $9,525
10
$9,526 – $38,700
12
$38,701 – $82,500
22
$82,501 – $157,500
24
$157,501 – $200,000
32
$200,001 – $500,000
35
$500,001+
37
i) Create a Mathematical Model that represents the aforementioned information to calculate the annual income tax.
ii) How much annual income tax you will have to pay if your monthly taxable income is $ 40,000
Rubrics
Uses information appropriately:
Applies appropriate procedures:
Answers the problem:
Rr.12.
1.) Calculate taxable income for 20X2
answer: 139,000
2.) Calculate taxes payable for 20X2
answer: 20,850
3.) Determine the current deferred tax liability at 12/31/X2
answer: 37200
4.) calculate total income tax expense for 20X2
answer: 58,050
5.) Compute net income after taxes for 20X2
answer: 328,950
6.) Calculate taxable income for 20X3
answer: 213,027
7.) The entry required at the end of 20X3 requires
answer: debit DTL for 26,040
8.) Compute net income after taxes for 20X3
answer: ???
9.) Calculate taxable income for 20X4
answer: 196,800
10.) Compute net income after taxes for 20X4
answer: ???
Using the information above, solve for parts 8 and 10
Ma3.
All final answers, unless otherwise indicated, have been rounded to the nearest $10. Also, assume that each question is independent of any other question. please answer questions using tax rules in effect for the year 2021, but ignoring temporary Covid-10 related changes.
8. During the year, Dan Davis, a single taxpayer, pays $2,200 of interest on a qualified student loan. Assume that Dan has adjusted gross income of $65,000. What student loan interest deduction may Dan claim on his Form 1040 for the year?
A. $2,500
B. 2,200
C. 1,100
D. 0
E. None of the above
9. A contribution made to which of the listed entities is not deductible?
A. Boy Scouts of America
B. Oxford University, England
C. Virginia Commonwealth University
D. Society for the Prevention of Cruelty to Animals
E. All of the above are deductible
Chapter 16 Solutions
CONNECT F/ INTERMEDIATE ACCTING>I<
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 - A net operating loss occurs when tax-deductible...Ch. 16 - Prob. 16.10QCh. 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 - Valuation allowance LO162, LO163 VeriFone Systems...Ch. 16 - Prob. 16.8ECh. 16 - Identify future taxable amounts and future...Ch. 16 - Prob. 16.14ECh. 16 - Identifying income tax deferrals LO161, LO162,...Ch. 16 - Concepts; terminology LO161 through LO168 Listed...Ch. 16 - FASB codification research LO165, LO168, LO1610...Ch. 16 - Prob. 16.1DMPCh. 16 - Prob. 16.2DMPCh. 16 - Prob. 16.9DMP
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