### Reconciliation of Pretax Financial Statement Income to Taxable Income for See ShippingFor the year ended December 31, 2024, See Shipping's reconciliation is as follows:- **Pretax accounting income (income statement):** $600,000- **Adjustments:** - Installment income taxable upon receipt next year: ($30,000) - Warranty expense in excess of deductible amount: $5,000 - Tax depreciation in excess of income statement amount: ($20,000)- **Taxable income (tax return):** $555,000The income tax rate is 25%.**Question:**What amount should See report as a noncurrent item related to deferred income taxes in its 2024 balance sheet?**Options:**1. Deferred tax liability of $11,2502. Deferred tax asset of $11,2503. Deferred tax liability of $45,0004. Deferred tax liability of $12,500 **Information for Franklin Freightways' First Year of Operations***Data in Millions of Dollars***Pretax Accounting Income:** $195**Included in Pretax Accounting Income:**- Overweight fines (not deductible for tax purposes): $5- Depreciation expense: $70- Depreciation in the tax return: $110**Applicable Tax Rate:** 25%There are no other temporary or permanent differences.**Question:**Franklin Freightways should have recorded ($ in millions):**Multiple Choice Options:**- A) Tax benefit of $10 due to the NOL.- B) Tax payable of $40.- C) Tax payable of $48.75.- D) Tax payable of $22.5.This exercise helps assess the impact of non-deductible fines and differing depreciation expenses on tax liability. Analyze the differences between the accounting and tax depreciation to determine the correct tax payable.

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A reconciliation of pretax financial statement income to taxable income is shown below for See Shipping for the year ended December 31, 2024, its first year of operations. The income tax rate is 25%. Pretax accounting income (income statement) Installment income taxable upon receipt next year Warranty expense in excess of deductible amount Tax depreciation in excess of income statement amount Taxable income (tax return) What amount should See report as a noncurrent item related to deferred income taxes in its 2024 balance sheet? Multiple Choice Deferred tax liability of $11,250 Deferred tax asset of $11,250 Deferred tax liability of $45,000 $ 600,000 (30,000) 5,000 (20,000) $ 555,000 Deferred tax liability of $12,500

A reconciliation of pretax financial statement income to taxable income is shown below for See Shipping for the year ended December 31, 2024, its first year of operations. The income tax rate is 25%. Pretax accounting income (income statement) Installment income taxable upon receipt next year Warranty expense in excess of deductible amount Tax depreciation in excess of income statement amount Taxable income (tax return) What amount should See report as a noncurrent item related to deferred income taxes in its 2024 balance sheet? Multiple Choice Deferred tax liability of $11,250 Deferred tax asset of $11,250 Deferred tax liability of $45,000 $ 600,000 (30,000) 5,000 (20,000) $ 555,000 Deferred tax liability of $12,500

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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A company reports 2024 pretax accounting income of $10 million, but because of a single temporary difference, taxable income is only $7 million. No temporary differences existed at the beginning of the year, and the tax rate is 25%. Prepare the appropriate journal entry to record income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).
A company reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Year Pretax Income (Loss) Tax Rate 2018 $142,000 17% 2019 94,000 17 2020 (208,800) 22 2021 318,500 22 In 2021, what amount of income tax payable should be reported for the company, assuming the loss can carry forward?
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The pretax financial income (or loss) figures for Shamrock Company are as follows. 2017 81,000 2018 (51,000 ) 2019 (35,000 ) 2020 111,000 2021 95,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2017 and a 20% tax rate for the remaining years.Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss carryforwards. All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that no valuation account is deemed necessary.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit 2017 enter an account title to record carryback enter a debit amount enter a…
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Arndt, Incorporated reported the following for 2024 and 2025 ($ in millions): Revenues. Expenses Pretax accounting income (income statement) Taxable income (tax return) Tax rate: 25% 2024 $888 760 $128 $116 a. Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2024 for $60 million. The cost is tax deductible in 2024. Answer is complete but not entirely correct. Deferred tax amounts ($ in millions) Classification Net noncurrent deferred tax asset ✔ $ Net noncurrent deferred tax liability X $ 2025 $980 800 b. Expenses include $2 million insurance premiums each year for life insurance on key executives. c. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2024 and 2025 were $33 million and $35 million, respectively. Subscriptions included in 2024 and 2025 financial reporting revenues were $25 million ($10 million collected in 2023 but not recognized as revenue until 2024) and $33 million,…
The information that follows pertains to Esther Food Products: a. At December 31, 2024, temporary differences were associated with the following future taxable (deductible) amounts: Depreciation Prepaid expenses Warranty expenses b. No temporary differences existed at the beginning of 2024. c. Pretax accounting income was $46,000 and taxable income was $9,000 for the year ended December 31, 2024. d. The tax rate is 25%. Required: Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2024. Complete this question by entering your answers in the tabs below. Calculation General Journal $ 32,000 11,000 (6,000) Complete the following table given below to record income taxes for 2024. Note: Amounts to be deducted should be entered with a minus sign. Description Pretax accounting income Permanent differences Income subject to taxation Temporary Differences Income taxable in current year $ Amount 46,000 X Tax Rate = x X Recorded as:
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