Disclosure issues of deferred tax and balance sheet classifications Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account. When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account. Similarly, when the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account. Deferred tax assets or liability are shown in balance sheet as net amount, if deferred tax asset is more than deferred tax liability then net amount of deferred tax asset is shown in asset side of balance sheet or vice versa. To prepare: The summary journal entry to record income tax expense.

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 16, Problem 16.5BYP

1.

To determine

Disclosure issues of deferred tax and balance sheet classifications

Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account. When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account. Similarly, when the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account.

Deferred tax assets or liability are shown in balance sheet as net amount, if deferred tax asset is more than deferred tax liability then net amount of deferred tax asset is shown in asset side of balance sheet or vice versa.

To prepare: The summary journal entry to record income tax expense.

2.

To determine

To compare: The change in deferred tax amount as per summary journal and actual changes of deferred taxes

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Problem 16-6 (IAA) Complex Company reported the following information relating to income before tax for accounting purposes: 2021 2022 2023 2024 Income tax rate In 2021, the entity recognized doubtful accounts of P100,000. The doubtful accounts were considered worthless or uncollectible in 2022. 2,000,000 3,000,000 4,000,000 5,000,000 25% Analysis of the tax and book records disclosed P120,000 in unearned rent income on December 31, 2021 that had been recognized as taxable income in 2021 when the cash was received. Also on December 31, 2021, estimated warranty cost of P300,000 had been recognized as expense on the books in 2021 when the product sales were made but is not deductible for tax purposes until paid. The unearned rent income on December 31, 2021 was realized and the actual warranty payments were made in the following years: Rent income per book Actual warranty payments 40,000 40,000 40,000 2022' 2023 2024 20,000 80,000 200,000 Required: 1. Prepare journal entries for 2021,…

Exercise 16-10 (Algo) Calculate income tax amounts under various circumstances; financial statement effects [LO16-2, 16-3] Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: ($ in thousands) Taxable income Future deductible amounts Future taxable amounts. Balance(s) at beginning of the year: Deferred tax asset Deferred tax liability The enacted tax rate is 25%. Required: Situation 1 2 3 4 $ 112 $ 244 $ 252 $ 344 16 20 20 16 16 56 2 16 8 2 For each situation, determine the following: Note: Enter your answers in thousands rounded to one decimal place (i.e. 1,200 should be entered as 1.2). Negative amounts should be indicated by a minus sign. Leave no cell blank, enter "O" wherever applicable. a. Income tax payable currently. b. Deferred tax asset-ending balance. c. Deferred tax asset-change. d. Deferred tax liability-ending balance. e. Deferred tax liability change. f. Income tax…

1. Ch03 Financial Planning Exercise 4 Chapter 3 Financial Planning Exercise 4 Effect of tax credit vs. tax exemption By defining after-tax income, demonstrate the differences resulting from a $1,500 tax credit versus a $1,500 tax deduction for a single taxpayer in the 25% tax bracket with $41,000 of pre- tax income. Round your answers to two decimal places. (Use Exhibit 3.3.) Deduction $ Credit $

Answer 2

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 16, Problem 16.5BYP

1.

To determine

Disclosure issues of deferred tax and balance sheet classifications

Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account. When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account. Similarly, when the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account.

Deferred tax assets or liability are shown in balance sheet as net amount, if deferred tax asset is more than deferred tax liability then net amount of deferred tax asset is shown in asset side of balance sheet or vice versa.

To prepare: The summary journal entry to record income tax expense.

2.

To determine

To compare: The change in deferred tax amount as per summary journal and actual changes of deferred taxes

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Answer 3

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 16, Problem 16.5BYP

1.

To determine

Disclosure issues of deferred tax and balance sheet classifications

Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account. When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account. Similarly, when the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account.

Deferred tax assets or liability are shown in balance sheet as net amount, if deferred tax asset is more than deferred tax liability then net amount of deferred tax asset is shown in asset side of balance sheet or vice versa.

To prepare: The summary journal entry to record income tax expense.

2.

To determine

To compare: The change in deferred tax amount as per summary journal and actual changes of deferred taxes

Expert Solution & Answer

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Answer 4

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 16, Problem 16.5BYP

1.

To determine

Disclosure issues of deferred tax and balance sheet classifications

Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account. When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account. Similarly, when the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account.

Deferred tax assets or liability are shown in balance sheet as net amount, if deferred tax asset is more than deferred tax liability then net amount of deferred tax asset is shown in asset side of balance sheet or vice versa.

To prepare: The summary journal entry to record income tax expense.

2.

To determine

To compare: The change in deferred tax amount as per summary journal and actual changes of deferred taxes

Expert Solution & Answer

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Answer 5

Chapter 16, Problem 16.5BYP

1.

To determine

Disclosure issues of deferred tax and balance sheet classifications

Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account. When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account. Similarly, when the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account.

Deferred tax assets or liability are shown in balance sheet as net amount, if deferred tax asset is more than deferred tax liability then net amount of deferred tax asset is shown in asset side of balance sheet or vice versa.

To prepare: The summary journal entry to record income tax expense.

2.

To determine

To compare: The change in deferred tax amount as per summary journal and actual changes of deferred taxes

Answer 6

Chapter 16, Problem 16.5BYP

1.

To determine

Disclosure issues of deferred tax and balance sheet classifications

Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account. When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account. Similarly, when the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account.

Deferred tax assets or liability are shown in balance sheet as net amount, if deferred tax asset is more than deferred tax liability then net amount of deferred tax asset is shown in asset side of balance sheet or vice versa.

To prepare: The summary journal entry to record income tax expense.

Answer 7

Chapter 16, Problem 16.5BYP

1.

To determine

Disclosure issues of deferred tax and balance sheet classifications

Deferred tax account shows the amount of reconciliation, which occurs due to the difference between the income tax expense account and the income tax payable account. When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account. Similarly, when the Income Tax Expense account i.e. the estimated income tax amount is less than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be credited to Deferred Tax Liability account.

Deferred tax assets or liability are shown in balance sheet as net amount, if deferred tax asset is more than deferred tax liability then net amount of deferred tax asset is shown in asset side of balance sheet or vice versa.

To prepare: The summary journal entry to record income tax expense.

Answer 8

2.

To determine

To compare: The change in deferred tax amount as per summary journal and actual changes of deferred taxes

Answer 9

2.

To determine

To compare: The change in deferred tax amount as per summary journal and actual changes of deferred taxes

Answer 10

Expert Solution & Answer

Answer 11

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Answer 12

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Answer 13

Ch. 16 - Prob. 16.1Q Ch. 16 - A deferred tax liability (or asset) is described...Ch. 16 - Prob. 16.3Q Ch. 16 - Prob. 16.4Q Ch. 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

Solution Summary: The author explains the deferred tax and balance sheet classifications.

To compare: The change in deferred tax amount as per summary journal and actual changes of deferred taxes

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