Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Where in its December 31, 2015, balance sheet does AF report deferred taxes? Howdoes this approach differ from the way deferred taxes are reported using U.S. GAAP?Using the Internet, determine how deferred taxes would be reported using IFRS atthe time of your research. Explain why that approach might differ from the way AFreported deferred taxes at December 31, 2015.
Wicks Corporation began operations on January 1, 2016. At the end of 2016, Wicks reported pretax financial income of $65,800 and taxable income of $63,430, due to two temporary differences. The income tax rate is 30% for 2016 through 2018, but Congress has enacted a tax rate of 35% for 2019 and beyond. To determine its deferred taxes, Wicks prepared the following schedule of expected future taxable and deductible amounts for the two temporary differences:
2017
2018
2019
2020
Future taxable amounts
$5,300
$4,600
$4,800
$3,900
Future deductible amount
(15,700)
Required:
1.
Prepare Wicks’s income tax journal entry at the end of 2016. Assume a valuation allowance is not required.
2.
Prepare the lower portion of the 2016 income statement for Wicks.
Youngman Corporation has temporary differences at December 31, 2017, that result in the following deferred taxes.
Deferred tax asset
$24,000
Deferred tax liability
69,000
Indicate how these balances would be presented in Youngman’s December 31, 2017, statement of financial position.
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- At December 31, 2017, Appaloosa Corporation had a deferred tax liability of $25,000. At December 31, 2018, the deferred tax liability is $42,000. The corporation’s 2018 current tax expense is $48,000. What amount should Appaloosa report as total 2018 income tax expense?arrow_forwardDuring 2021 a company reported an increase in the deferred tax liability account of $77,990, an increase in the deferred tax asset account of $35,325 and an income tax liability of $398,555. What is the income tax expense to be reported in the income statement for the year ending December 31, 2021?arrow_forwardIn late 2017 the federal tax rate for subsequent years was decreased from 35% to 21%. How would this affect an existing deferred tax liability? How would the change be reflected in net income?arrow_forward
- At December 31, 2017, Percheron Inc. had a deferred tax asset of $30,000. At December 31, 2018, the deferred tax asset is $59,000. The corporation’s 2018 current tax expense is $61,000. What amount should Percheron report as total 2018 income tax expense?arrow_forwardAt December 31, 2017, Fell Corporation had a deferred tax liability of $680,000, resulting from future taxable amounts of $2,000,000 and an enacted tax rate of 34%. In May 2018, a new income tax act is signed into law that raises the tax rate to 40% for 2018 and future years. Prepare the journal entry for Fell to adjust the deferred tax liability.arrow_forwardHow much is the deferred tax to be recognized in year 2017? Answer is “deferred tax asset of $18 million”. Please explain the reasoning and calculations.arrow_forward
- The amount of net deferred tax asset/(liability) at January 1, 2008 is? The amount of net deferred tax asset/(liability) at December 31, 2008 is? Income tax expense – current for 2008 is?arrow_forwardAt December 31, 2017, Suffolk Corporation had an estimated warranty liability of $105,000 for accounting purposes and $0 for tax purposes. (The warranty costs are not deductible until paid.) The effective tax rate is 40%. Compute the amount Suffolk should report as a deferred tax asset at December 31, 2017.arrow_forwardA company's trial balance at 31 December 2021 shows a debit balance of GHS700,000 on current tax and a credit balance of GHS8,400,000 on deferred The directors have estimated the provision for income tax for the year at GHS4.5m and the required deferred tax provision is GHS5.6m, GHS1.2m of which relates to a property revaluation. What is the profit or loss income tax charge for the year ended 31 December 2021?arrow_forward
- XYZ Company reported the following pretax income (loss) and related tax rates during the years 2016-2021. Year Pretax Income (loss) Tax rate 2016 $75,000 30% 2017 150,000 30% 2018 240,000 40% 2019 (540,000) 48% 2020 210,000 40% 2021 300,000 42% Prepare the journal entries for the years 2019 and 2020 to record income taxes and the tax effects of the loss. Assume that XYZ elects the carryback provision where possible and it is probable that it will realize benefits of any loss carryforward. Prepare the portion of the income statement that presents your answer in part (a) for the year ended 2019.arrow_forwardRich Goma Corporation failed to file its income tax return for the fiscal year ending August 31, 2021. On June 6, 2022, it filed an income tax return with a basic tax still due and payable for the fiscal year amounting to P500,000. Compute the interest penalty to be imposed by the BIR. P28,603 P45,873 P28,438 P46,207arrow_forwardAt the end of 2016, Sentry Company reported a deferred tax liability of $6,120 based on an income tax rate of 30%. On January 2, 2017, Congress changed the income tax rate to 35%. Required: 1. Calculate the amount of the adjustment to Sentry’s 2016 year-end deferred tax liability. 2. Prepare the journal entry to correct Sentry’s deferred tax liability.arrow_forward
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