Concept explainers
1.
Temporary Difference
Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records, is known as temporary difference.
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 less than the Income Tax Payable account, this difference is known as Deferred Tax Liability.
To prepare: The
2.
To prepare: The journal entry to record the income taxes in 2019.
3.
The appropriate balance in the deferred tax liability account at the end of 2019.
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Intermediate Accounting
- LO.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_forwardIntermediate Accounting ll ch 16 7. At the end of 2023, Payne Industries had a deferred tax asset account with a balance of $25 million attributable to a temporary book-tax difference of $100 million in a liability for estimated expenses. At the end of 2024, the temporary difference is $64 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2024 is $180 million and the tax rate is 25%. Required: 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. 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. Required 1 Record 2024 income taxes Transaction General Journal Debit Credit 1 Record…arrow_forwardRr.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 10arrow_forward
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- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT