20X8 20X9 tax accounting income (financial statements) ple income (tax return) ne tax rate $510,000 295,000 $495,000 710,000 40% 40% are no existing temporary differences other than those reflected in these data. There are no ed:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Nalad Corp. provided the following data related to accounting and taxable income:
20X8
20X9
Pre-tax accounting income (financial statements)
Taxable income (tax return)
$510,000
295,000
40%
$495,000
710,000
40%
Income tax rate
There are no existing temporary differences other than those reflected in these data. There are no permanent differences.
Required:
1-a. How much tax expense would be reported in each year if the taxes payable method was used?
Tax Expense
20X8
20X9
1-b. What is the implied tax rate? (Round your answers to 1 decimal place.)
20X8
20X9
Implied tax rate
Transcribed Image Text:Nalad Corp. provided the following data related to accounting and taxable income: 20X8 20X9 Pre-tax accounting income (financial statements) Taxable income (tax return) $510,000 295,000 40% $495,000 710,000 40% Income tax rate There are no existing temporary differences other than those reflected in these data. There are no permanent differences. Required: 1-a. How much tax expense would be reported in each year if the taxes payable method was used? Tax Expense 20X8 20X9 1-b. What is the implied tax rate? (Round your answers to 1 decimal place.) 20X8 20X9 Implied tax rate
2-a. How much tax expense would be reported using comprehensive tax allocation (liability method).
Tax Expense
20X8
20X9
2-b. How much deferred income tax would be reported using comprehensive tax allocation (liability method).
Deferred
Income Tax
20X8
20X9
2-c. Why is the two year total tax expense is the same under both tax payable method and liability method? (Select all that apply.)
O Temporary difference between accounting and taxable income has reversed over two-year time frame.
Temporary difference between accounting and taxable income has not reversed over two-year time frame.
Permanant difference between accounting and taxable income has reversed over two-year time frame.
Permanant difference between accounting and taxable income has not reversed over two-year time frame.
OO00
Transcribed Image Text:2-a. How much tax expense would be reported using comprehensive tax allocation (liability method). Tax Expense 20X8 20X9 2-b. How much deferred income tax would be reported using comprehensive tax allocation (liability method). Deferred Income Tax 20X8 20X9 2-c. Why is the two year total tax expense is the same under both tax payable method and liability method? (Select all that apply.) O Temporary difference between accounting and taxable income has reversed over two-year time frame. Temporary difference between accounting and taxable income has not reversed over two-year time frame. Permanant difference between accounting and taxable income has reversed over two-year time frame. Permanant difference between accounting and taxable income has not reversed over two-year time frame. OO00
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