Compute the deferred income tax amount reported in the balance sheet for each year by Corporation M and also to explain the reason for considering deferred income tax as liability.

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Answer 1

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Chapter 9, Problem 9.13P

1.

To determine

Compute the deferred income tax amount reported in the balance sheet for each year by Corporation M and also to explain the reason for considering deferred income tax as liability.

2.

To determine

Compute income tax expense for each year.

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1. A special manufacturing and handling device was purchased by Alfonso Manufacturing for $200,000 and is depreciated over MACRS. CFBT is estimated to amount to $800,000 for the first 2 years followed by $600,000 thereafter until the asset is retained. The effective tax rate, Te is 35% and interest is 10% per year. In present worth dollars determine the CFAT and determine if it was a viable purchase. (Note answer must be in a tabular format)

Northwestern Export Services purchased some computers for $80,000 in Year 1. The equipment is depreciated for financial reporting purposes over 5 years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 20%. Amounts for pretax GAAP accounting income, depreciation, and taxable income in Year 1, Year 2, Year 3, Year 4, and Year 5 are as follows: $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Pretax accounting income $240 $195 $210 $285 $320 Depreciation on income statement 16 16 16 16 16 Depreciation on tax return (27) (35) (12) (6) 0 Taxable income $229 $176 $214 $295 $336 a) What type of book-tax difference is this? b) Prepare the appropriate journal entry related to the tax deferral ONLY at December 31, Year 1. (Note: The purchase of computers has already been recorded in Year 1.)Note: Round answers ($ in thousands) to the nearest whole number, if applicable. ($ in thousands)…

Auburn Rentals acquired an asset for $160 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis with no residual value. For tax purposes the asset is depreciated using an accelerated method. The enacted tax rate is 30%. Annual amounts for pretax accounting income, depreciation, and taxable income are as follows: 2021 2022 2023 2024 Pretax accounting income $500 $550 $600 $650 Depreciation on the income statement 40 40 40 40 Depreciation on the tax return (50) (66) (30) _(14). Taxable income 450 484 570 636 On December 31, 2023, what amount of deferred tax liability would Auburn report? Multiple Choice S3.2 million $10.0 million $26.0 million $7.8 million

Answer 2

Question

Chapter 9, Problem 9.13P

1.

To determine

Compute the deferred income tax amount reported in the balance sheet for each year by Corporation M and also to explain the reason for considering deferred income tax as liability.

2.

To determine

Compute income tax expense for each year.

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Answer 3

Question

Chapter 9, Problem 9.13P

1.

To determine

Compute the deferred income tax amount reported in the balance sheet for each year by Corporation M and also to explain the reason for considering deferred income tax as liability.

2.

To determine

Compute income tax expense for each year.

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Answer 4

Question

Chapter 9, Problem 9.13P

1.

To determine

Compute the deferred income tax amount reported in the balance sheet for each year by Corporation M and also to explain the reason for considering deferred income tax as liability.

2.

To determine

Compute income tax expense for each year.

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Answer 5

Chapter 9, Problem 9.13P

1.

To determine

Compute the deferred income tax amount reported in the balance sheet for each year by Corporation M and also to explain the reason for considering deferred income tax as liability.

2.

To determine

Compute income tax expense for each year.

Answer 6

Chapter 9, Problem 9.13P

1.

To determine

Compute the deferred income tax amount reported in the balance sheet for each year by Corporation M and also to explain the reason for considering deferred income tax as liability.

Answer 7

Chapter 9, Problem 9.13P

1.

To determine

Compute the deferred income tax amount reported in the balance sheet for each year by Corporation M and also to explain the reason for considering deferred income tax as liability.

Answer 8

2.

To determine

Compute income tax expense for each year.

Answer 9

2.

To determine

Compute income tax expense for each year.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 9 - Prob. 1Q Ch. 9 - Prob. 2Q Ch. 9 - Prob. 3Q Ch. 9 - Prob. 4Q Ch. 9 - Prob. 5Q Ch. 9 - Prob. 6Q Ch. 9 - Prob. 7Q Ch. 9 - Define deferred revenue. Why is it a liability?Ch. 9 - Prob. 9Q Ch. 9 - Define working capital. How is working capital...

Compute the deferred income tax amount reported in the balance sheet for each year by Corporation M and also to explain the reason for considering deferred income tax as liability.

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Compute the deferred income tax amount reported in the balance sheet for each year by Corporation M and also to explain the reason for considering deferred income tax as liability.

Compute income tax expense for each year.

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