INTERMEDIATE ACCOUNTING-MYLAB W/ETEXT
3rd Edition
ISBN: 9780136946601
Author: GORDON
Publisher: PEARSON
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Question
Chapter 17, Problem 17.18E
a.
To determine
To prepare:
Given information:
Loss before tax for year 8 is $250,000 and tax rate is 40%.
Income before tax for year 9 is $20,000 and tax rate is 38%.
Income before tax for year 10 is $30,000 and tax rate is 38%.
b.
To determine
To prepare: Partial income statement for fourth to eighth year.
c.
To determine
To prepare: Foot note to reconcile federal tax rate and effective tax rate.
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This year AB Company has each of the following items in its income statement.
Part A.
Gross profit on instalment sales
Revenues on long term construction contracts
Estimated costs of product warranty contracts
Premiums on officers’ life insurance policies as AB Company as beneficiary.
Instructions:
(a) Under what conditions would deferred income taxes need to be reported in the financial statements?
(b) Specify when deferred income taxes would need to be recognized for each of the items above, and indicate the rationale for such recognition.
Part B.
AB Company’s president has heard that deferred income taxes can be classified in different ways in the balance sheet.
Instructions:
Identify the conditions under which deferred taxes would be classified as noncurrent item in the balance sheet. What justification exists for such classification?
Part A: This year, Gumowski Company has each of the following items in its income statement.
1. Gross profits on installment sales.
2. Revenues on long-term construction contracts.
3. Estimated costs of product warranty contracts.
4. Premiums on officers' life insurance policies with Gumowski as beneficiary.
Instructions
a. Indicate where deferred income taxes are reported in the financial statements.
b. Specify when deferred income taxes would need to be recognized for each of the items above, and indicate the rationale for such recognition.
Part B: Gumowski Company's president has heard that deferred income taxes can be classified in different ways in the balance sheet.
Instructions
Identify the conditions under which deferred income taxes would be classified as a noncurrent item in the balance sheet. What justification exists for such classification?
At the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of a liability account for estimated expenses and its tax base. Taxable income is $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 35%.
Required:
a. Prepare the journal entry(s) to record income taxes during the period.
b.How much will income tax expense be shown in the income statement?
c. What will be the balance sheet disclosure during the period regarding taxes?
Chapter 17 Solutions
INTERMEDIATE ACCOUNTING-MYLAB W/ETEXT
Ch. 17 - Prob. 17.1QCh. 17 - When will income tax expense and income taxes...Ch. 17 - Will permanent differences cause the effective tax...Ch. 17 - When do permanent differences arise?Ch. 17 - How are deferred tax assets and deferred tax...Ch. 17 - Prob. 17.6QCh. 17 - Prob. 17.7QCh. 17 - Prob. 17.8QCh. 17 - Prob. 17.9QCh. 17 - How does a firm determine the need for a valuation...
Ch. 17 - Prob. 17.11QCh. 17 - Prob. 17.12QCh. 17 - Prob. 17.13QCh. 17 - How does an entity account for uncertain tax...Ch. 17 - Prob. 17.15QCh. 17 - Prob. 17.16QCh. 17 - Do U.S. GAAP and IFRS classify deferred tax...Ch. 17 - Prob. 17.18QCh. 17 - Prob. 17.1MCCh. 17 - Prob. 17.2MCCh. 17 - Prob. 17.3MCCh. 17 - Prob. 17.4MCCh. 17 - Prob. 17.5MCCh. 17 - Prob. 17.6MCCh. 17 - Prob. 17.7MCCh. 17 - Prob. 17.1BECh. 17 - Income Taxes Payable. Limmox Company has...Ch. 17 - Permanent Differences. Simmox Company's income...Ch. 17 - Permanent Differences. Plimmox Company's income...Ch. 17 - Permanent Differences, Reconciliation of Statutory...Ch. 17 - Prob. 17.6BECh. 17 - Prob. 17.7BECh. 17 - Prob. 17.8BECh. 17 - Prob. 17.9BECh. 17 - Prob. 17.10BECh. 17 - Temporary Differences, Deferred Tax Liability....Ch. 17 - Temporary Differences. Deferred Tax Asset....Ch. 17 - Temporary Differences, Deferred Tax Asset. Using...Ch. 17 - Prob. 17.14BECh. 17 - Realizability of Deferred Assets. Maves, Inc....Ch. 17 - Prob. 17.16BECh. 17 - Prob. 17.17BECh. 17 - Change in Tax Rates, IFRS. Use the same...Ch. 17 - Prob. 17.19BECh. 17 - Prob. 17.20BECh. 17 - Prob. 17.21BECh. 17 - Prob. 17.22BECh. 17 - Prob. 17.23BECh. 17 - Prob. 17.24BECh. 17 - Prob. 17.25BECh. 17 - Prob. 17.26BECh. 17 - Prob. 17.27BECh. 17 - Prob. 17.1ECh. 17 - Prob. 17.2ECh. 17 - Prob. 17.3ECh. 17 - Prob. 17.4ECh. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Prob. 17.7ECh. 17 - Prob. 17.8ECh. 17 - Change in Tax Rates, Permanent Difference,...Ch. 17 - Prob. 17.10ECh. 17 - Prob. 17.11ECh. 17 - Net Operating Loss, Carryback. Phlash Photo Labs,...Ch. 17 - Net Operating Loss, Carryforward. Loggins Lumber...Ch. 17 - Prob. 17.14ECh. 17 - Prob. 17.15ECh. 17 - Net Operating Loss, Carryforward, Tax Rate Change....Ch. 17 - Prob. 17.17ECh. 17 - Prob. 17.18ECh. 17 - Prob. 17.19ECh. 17 - Prob. 17.20ECh. 17 - Uncertain Tax Positions. Lewis Eagle Corporation...Ch. 17 - Uncertain Tax Positions. Based on the information...Ch. 17 - Prob. 17.23ECh. 17 - Prob. 17.24ECh. 17 - Prob. 17.1PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.3PCh. 17 - Prob. 17.4PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.6PCh. 17 - Prob. 17.7PCh. 17 - Prob. 17.8PCh. 17 - Prob. 17.9PCh. 17 - Prob. 17.10PCh. 17 - Prob. 17.11PCh. 17 - Prob. 17.12PCh. 17 - Prob. 17.13PCh. 17 - Prob. 17.14PCh. 17 - Prob. 17.15PCh. 17 - Prob. 1JCCh. 17 - Prob. 1FSCCh. 17 - Prob. 1SSCCh. 17 - Prob. 2SSCCh. 17 - Scene 1: The concept of the deferred tax liability...Ch. 17 - Basis for Conclusions Case 2: Uncertain Tax...
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- At the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of a liability account for estimated expenses and its tax base. Taxable income is $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 35%. Required: a. Prepare the journal entry(s) to record income taxes during the period. b.How much will income tax expense be shown in the income statement? c.arrow_forward(Accounting and Classification of Deferred Income Taxes)Part A: This year, Gumowski Company has each of the following items in its income statement.1. Gross profits on installment sales.2. Revenues on long-term construction contracts.3. Estimated costs of product warranty contracts.4. Premiums on officers’ life insurance policies with Gumowski as beneficiary.Instructions(a) Indicate where deferred income taxes are reported in the financial statements.(b) Specify when deferred income taxes would need to be recognized for each of the items above, and indicate the rationale for such recognition. Part B: Gumowski Company’s president has heard that deferred income taxes can be classified in different ways in the balance sheet. InstructionsIdentify the conditions under which deferred income taxes would be classified as a noncurrent item in the balance sheet. What justification exists for such classification?arrow_forwardRequired Answer each of the following questions by providing supporting computations. 1. Assume that the company’s income tax rate is 30% for all items. Identify the tax effects and after-tax amounts of the three items labeled pretax. 2. Compute the amount of income from continuing operations before income taxes. What is the amount of the income tax expense? What is the amount of income from continuing operations? 3. What is the total amount of after-tax income (loss) associated with the discontinued segment? 4. What is the amount of net income for the year?arrow_forward
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