RR 3. A tax lawsuit related to the year 2021 was settled late in 2023. It was determined that thecompany owed an additional $93,000 in taxes related to 2021. The company did not record aliability in 2019 or 2020 because the possibility of loss was considered remote and charged the$93,000 to retained earnings in 2023 as a correction of a prior year's error. (It is not an IncomeTax Expense).3.Retained EarningsShow Transcribed TextCU9300093000

Journal entry is the process of documenting commercial transactions for the first time in the books…

Answered: 3. A tax lawsuit related

Business

Accounting

3. A tax lawsuit related

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter3: Taxes On The Financial Statements

Section: Chapter Questions

Problem 14P

See similar textbooks

Similar questions

Lindemax Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. (Assume the carryback provision is used for a net operating loss.) The tax rates listed were all enacted by the beginning of 2018. Instructions a) Prepare the journal entries for 2020 and 2021, assuming that based on the weight of available evidence, it is probable that one-fourth of the benefits of the loss carryforward will not be realized.
During the preparation of financial statement for Master Ltd for 2023 it was discovered thatan amount of $22,000, incurred in September 2021 and payable to an overseas supplier, wasoverlooked and not paid or provided for in the financial statement ending 30 June 2022. Theamount is considered to be material and will be permitted as a deduction for tax purposes(tax rate 30%).Required:i) Prepare the necessary journal entry to correct this error.
Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2021. Assume Fore will carry back its NOL to prior years. 2. What is the net operating loss reported in 2021 income statement? 3. Prepare the journal entry to record income taxes in 2022 assuming pretax accounting income is $288 million. No additional temporary differences originate in 2022.
Bb1.
Which of the following statements is incorrect with respect to the treatment of a net operating loss arising in 2022? a.Unlike individuals, corporations do not adjust their NOLs for net capital losses or nonbusiness deductions. b.The deduction for any carryover year of the NOL is limited to 80% of taxable income (determined without regard to the NOL deduction). c.A corporation may claim a dividends received deduction in computing an NOL. d.An NOL is generally carried back 2 years and forward 20 years.
c. Assume the same facts as above and in part (b), except that Washi’s net income included a loss on discontinued operations of $33,000 (net of tax). Prepare the journal entries necessary to record Flounder’s equity in the net income of Washi for 2023. Ignore income taxes. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit enter an account title to record investment income and loss enter a debit amount enter a credit amount enter an account title to record investment income and loss enter a debit amount enter a credit amount enter an account title to record investment income and loss enter a debit amount enter a credit amount (To record investment income and loss) enter an account title to record depreciation…
At December 31, 2019, Sunland Company had a net deferred tax liability of $361,200. An explanation of the items that compose this balance is as follows. Temporary Differences Resulting Balancesin Deferred Taxes1. Excess of tax depreciation over book depreciation $186,400 2. Accrual, for book purposes, of estimated loss contingency frompending lawsuit that is expected to be settled in 2020. The losswill be deducted on the tax return when paid. (52,000)3. Accrual method used for book purposes and installment methodused for tax purposes for an isolated installment sale of an investment. 226,800 $361,200 In analyzing the temporary differences, you find that $29,100 of the depreciation temporary difference will reverse in 2020, and $127,800 of the temporary difference due to the installment sale will reverse in 2020. The tax rate for all years is 20%. Indicate the manner in which deferred taxes should be presented on Sunland Company’s December 31, 2019, balance sheet.
Due to differences between depreciation reported in the income statement and depreciation deducted for tax purposes, Lucas Corp. has $2 million in temporary differences that will increase taxable income next year. Assuming that Lucas has no other temporary differences, deferred income taxes should be reported in this year's ending balance sheet as a______?
Lindemax Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. (Assume the carryback provision is used for a net operating loss.) The tax rates listed were all enacted by the beginning of 2018. Instructions a) Prepare the journal entries for the years 2018-2021 to record income tax expense (benefit) and income tax payable (refundable) and the tax effects of the loss carryback and carryforward, assuming that the end of 2020 it is probable that the benefits of the loss carryforward will be realized in the future.
A company reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Year Pretax Income (Loss) Tax Rate 2018 $183,000 17% 2019 69,000 17 2020 (206,800) 23 2021 385,100 23 Assuming that the company uses the carryforward provision, what is the amount of income or loss that will be reported for 2020? (Enter the amount only. DO NOT put a plus or minus sign in front of the amount.)
The following information relates to Crane Corp.: At July 1, 2022 At June 30, 2023 Temporary difference, giving rise to future taxable amounts Temporary difference, giving rise to future deductible amounts $28,000 $75,000 18,000 45,000 Accounting income for the year ended June 30, 2023 was $65,000. No permanent differences existed during the fiscal year. The company was expected to operate profitably in the future. The tax rate was 20% for the current and future years. Crane Corp. follows ASPE. (a) Calculate the amount of taxable income for 2023, Taxable Income for 2023 $
Skysong Inc. reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Year Pretax Income (loss) Tax Rate 2018 123,300 17% 2019 113,000 17% 2020 (282,000) 19% 2021 303,000 19% Prepare the journal entries for 2020 and 2021, assuming that based on the weight of available evidence, it is more likely than not that one-fourth of the benefits of the loss carryforward will not be realized.