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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Incomc Taxes Then Company has been in operation for several years. It has both a deductible and a taxable temporary difference. At the beginning of 2019, its deferred tax asset was $690, and its deferred tax liability was $750. The company expects its lutine deductible amount to be “deductible” in 2020 and its Inline taxable amount to 1кг “taxable” in 2021. In 2018, Congress enacted income tax rates for future years as follows: 2019, 30%; 2020, 34%; and 2021, 35%. At the end of 2019, Then reported income taxes payable of $25,800, an increase in its deferred tax liability of $300, and an ending balance in its deferred tax asset of $860. Thun has prepared the following schedule of items related to its income taxes for 2019.

Chapter 18, Problem 8E, Incomc Taxes Then Company has been in operation for several years. It has both a deductible and a

Required:

Fill in the blanks in the preceding schedule. Show your calculations.

To determine

Complete the schedule.

Explanation

Income Tax Expenses: The expenses which are related to the taxable income of the individuals and business entities for an accounting period, and are recognized by them for the purpose of federal government and state government tax are called as income tax expenses.

Complete the schedule:

ItemAmount
Taxable Income 2019 (1)$86,000
Future Taxable Amount 12/31/19 (2)$3,000
Increase in future deductible amount during 2019 (3)$500
Income tax expense for 2019 (4)$25,930

Table (1)

Working Note (1): Compute taxable income for 2019:

Taxable Income for 2019= $25,800(income tax payable)×10030=$86,000

Working Note (2): Compute future taxable income for 12/31/19:

Future Taxable Amount(12/31/19)= Total deferred tax liability×10035(tax rate of 2018)= {$750(begining deferred tax asset)+$300(Increase in the year)}×10035= $1,050×<

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