GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
9th Edition
ISBN: 9781260089042
Author: J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 16, Problem 16.4BYP
Communication Case 16–4
• LO16–1, LO16–4, LO16–5
You are the new controller for Engineered Solutions. The company treasurer, Randy Patey, believes that as a result of pending legislation, the current 40% income tax rate will be decreased for 2019 to 35% and is uncertain which tax rate to apply in determining deferred taxes for 2018. Patey also is uncertain which differences should be included in that determination and has solicited your help. Your accounting group provided you the following information.
Two items are relevant to the decisions. One is the $50,000 insurance premium the company pays annually for the CEO’s life insurance policy, for which the company is the beneficiary. The second is that Engineered Solutions purchased a building on January 1, 2017, for $6,000,000. The building’s estimated useful life is 30 years from the date of purchase, with no salvage value.
Required:
Write a memo to Patey that:
- a. Identifies the objectives of accounting for income taxes.
- b. Differentiates temporary differences and permanent differences.
- c. Explains which tax rate to use.
- d. Calculates the
deferred tax liability at December 31, 2018.
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5-12A • LO 4
The following unemployment tax rate schedule is in effect for the calendar year 2021 in State A, which uses the
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See Example 5-10 on page 5-16
Reserve Ratio
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0.0% or more, but less than 1.0% .
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2.6% or more, but less than 2.8%
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3.0% or more, but less than 3.2%
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.......
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Exercise 16-32 (Algo) Tax credit; uncertain tax position [LO16-9]
Delta Catfish Company has taken a position in its tax return to claim a tax credit of $20 million (direct reduction in taxes payable) and
has determined that its sustainability is "more likely than not,”" based on its technical merits. Delta has developed the probability table
shown below of all possible material outcomes:
Probability Table ($ in millions)
Amount of the tax benefit that management expects to receive
Percentage likelihood that the tax benefit will be sustained at this level
$20 $20 $18 $6 $4
10% 20% 25% 20% 25%
Delta's taxable income is $88 million for the year. Its effective tax rate is 25%. The tax credit would be a direct reduction in current
taxes payable.
Required:
1. At what amount would Delta measure the tax benefit in its income statement?
2. Prepare the appropriate journal entry for Delta to record its income taxes for the year.
SHOW
4-10A • LO 3
See Example 4-11 on page 4-22 MENOW
Mattola Company is giving each of its employees a holiday bonus of $100 on December 13, 20-- (a nonpayday). The
company wants each employee's check to be $100. The supplemental tax percent is used.
a. What will be the gross amount of each bonus if each employee pays a state income tax
of 2.8% (besides the other payroll taxes)?
b. What would the net amount of each bonus check be if the company did not gross-up
the bonus?
2$
2$
Chapter 16 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
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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