Determine
• LO16–6
Corning-Howell reported taxable income in 2018 of $120 million. At December 31, 2018, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below:
The total deferred tax asset and
Required:
1. Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2018.
2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2018.
3. Determine the income tax payable currently for the year ended December 31, 2018.
4. Prepare the
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INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
- 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_forwardLO.5 Beige Corporation has a fiscal year ending April 30. For the year ending April 30, 2018, Beige generated taxable income of 1,200,000. What is Beige Corporations tax liability for this period?arrow_forward39 Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: SITUATION Taxable income Amounts at year-end: Future deductible amounts Future taxable amounts Balances at beginning of year, debit (credit): Deferred tax asset Deferred tax liability The enacted tax rate is 40% for both situations. Required: For each situation determine the following: (a) Income tax payable currently. (b) Deferred tax asset - balance at year-end. (c) Deferred tax asset change debit or (credit) for the year. (d) Deferred tax liability - balance at year-end. (e) Deferred tax liability change debit or (credit) for the year. (f) Income tax expense for the year. 1 2 $ 39,000 $ 79,000 4,900 0 11,100 4,900 $ 1,000 0 $ 4,440 1,000 SITUATION 2arrow_forward
- Problem 16-8 (Algo) Multiple differences; taxable income given; two years; balance sheet classification; change in tax rate [LO16-1, 16-2, 16-3, 16-5, 16-6, 16-8] Skip to question [The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 936 $ 1,028 Expenses 792 848 Pretax accounting income (income statement) $ 144 $ 180 Taxable income (tax return) $ 108 $ 214 Tax rate: 25% Expenses each year include $54 million from a two-year casualty insurance policy purchased in 2021 for $108 million. The cost is tax deductible in 2021. Expenses include $2 million insurance premiums each year for life insurance on key executives. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2021 and 2022 were $55 million and $71 million, respectively. Subscriptions included in 2021 and…arrow_forwardProblem 16-8 (Algo) Multiple differences; taxable income given; two years; balance sheet classification; change in tax rate [LO16-1, 16-2, 16-3, 16-5, 16-6, 16-8] Skip to question [The following information applies to the questions displayed below.] Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 936 $ 1,028 Expenses 792 848 Pretax accounting income (income statement) $ 144 $ 180 Taxable income (tax return) $ 108 $ 214 Tax rate: 25% Expenses each year include $54 million from a two-year casualty insurance policy purchased in 2021 for $108 million. The cost is tax deductible in 2021. Expenses include $2 million insurance premiums each year for life insurance on key executives. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2021 and 2022 were $55 million and $71 million, respectively. Subscriptions included in 2021 and…arrow_forwardQuestion 1 A Grace Corporation's pretax financial income is $600,000 and taxable income is $550,000 for year 2020. Its beginning deferred tax liability account has a balance of $75,000. Its cumulative temporary differences for year-end 2020 is equal to $300,000 and will reverse and result in taxable amounts as follows: Year Taxable Amount 2021 $100,000 2022 $ 75,000 2023 $125,000 The tax rate is 30% for all years. Required: (i) Calculate the taxes payable for the year 2020 (ii) Calculate the deferred tax liability for the year 2020 (iii) Calculate the total tax expense for 2020 (iv) Prepare the journal entry to record the tax expense for 2020 (v) Prepare the income statement presentation of the tax amounts (i) The taxes payable for year 2X20 are calculated as follows: Pretax financial income for 2X20 Answer Temporary difference at end of…arrow_forward
- Q1. Taxable income and applicable tax rates for C.J. Company’s first four years are shown below. For each year, taxable income and pretax financial income are identical. In the table below, taxable income is before any consideration of NOL carryback and carryforward. The enacted tax rates were known at 1/1/2018. Taxable Income Enacted tax rate 2018 $200 20% 2019 ($300) 15% 2020 $340 25% 2021 $210 25% Now assume that C.J. opted to carryback its 2019 NOL and carryforward any unused NOL to future years. Complete the table below for 2018 through 2021 to show the amount of income tax payable to the IRS or the refund due from the IRS for each year. Put your answer in the table below. Show tax payable as a positive number and tax refund as a negative number. Year Tax…arrow_forwardCase 7. On January 1, 2020, Power Corporation approved a plan to dispose of a business segment. It is expected that the sale will occur on April 30, 2021. On December 31, 2020, the carrying value of the net assets of the segments was P4,000,000 and the net recoverable amount was P3,600,000. During 2016, the company paid employees severance and relocation costs of P200,000 as a direct result of the discontinued operations. The revenues and expenses of the discontinued segment during 2020 were as follows: (Income tax rate is 35%) Revenue 4,400,000 Expense 5,800,000arrow_forwardProblem 2 E19.1B (LO 1,2) (One Temporary Difference, Future Taxable Amounts, One Rate, No Beginning Deferred Taxes) Allied Corporation has one temporary difference at the end of 2020 that will reverse and cause deductible amounts of $40,000 in 2021, and $70,000 in 2022. Allied's pretax financial income for 2020 is $125,000, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2020. Instructions (a) Compute taxable income and income taxes payable for 2020. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (c) Prepare the income tax expense section of the income statement for 2020, beginning with the line "Income before income taxes."arrow_forward
- Problem 16-7 (Algo) Multiple differences; calculate taxable income; balance sheet classification [LO16-2, 16-3, 16-5, 16-8] Sherrod, Inc., reported pretax accounting income of $92 million for 2021. The following information relates to differences between pretax accounting income and taxable income: Income from installment sales of properties included in pretax accounting income in 2021 exceeded that reported for tax purposes by $6 million. The installment receivable account at year-end 2021 had a balance of $8 million (representing portions of 2020 and 2021 installment sales), expected to be collected equally in 2022 and 2023. Sherrod was assessed a penalty of $3 million by the Environmental Protection Agency for violation of a federal law in 2021. The fine is to be paid in equal amounts in 2021 and 2022. Sherrod rents its operating facilities but owns one asset acquired in 2020 at a cost of $104 million. Depreciation is reported by the straight-line method, assuming a four-year…arrow_forwardQuestion 8 Flint Corporation has historically followed ASPE, but is considering a change to IFRS. It has temporary differences at December 31, 2020, that result in the following SFP future income tax accounts: Deferred tax liability, current Deferred tax asset, current Deferred tax liability, non-current Deferred tax asset, non-current ▼ (a) $30,600 $50,500 $91,000 $23,700 Your answer is correct. Indicate how these balances will be presented in Flint's December 31, 2020 SFP, assuming that Flint reports under the ASPE future income taxes method.arrow_forwardWhat amount of current income tax liability should be reported at year end? a. ₱ 1,780,000 b. ₱ 2,280,000 c. ₱ 2,880,000 d. ₱ 2,580,000arrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT