a.) For the current year temporary differences existed between the financial statement carrying amounts and the tax basis of the following: Carrying AmountTax BasisFuture Taxable or(Deductible)AmountBuildings andequipment$50,000,000 $36,000,000 $14,000,000 Prepaid insurance 3,000,000 0 3,000,000 Liability-losscontingency 12,000,000 0 (12,000,000) (b.) No temporary differences existed at the beginning of the year.(c.) Pretax accounting income was $200,000,000 and taxable income was $110,000,000 for the year and the tax rate is 40%. Permanent differences are the cause of any difference between pretax accounting income and taxable income that are not due to temporary differences. Required:Prepare the journal entry to record the tax provision for the current year.

Income tax refers to the amount that is paid by an individual or company to the state, local, and…

Answered: a.) For the current year temporary…

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.) For the current year temporary differences existed between the financial statement carrying amounts and the tax basis of the following:

	Carrying Amount	Tax Basis	Future Taxable or (Deductible) Amount
Buildings and equipment	$	50,000,000		$	36,000,000	$	14,000,000
Prepaid insurance		3,000,000			0		3,000,000
Liability-loss contingency		12,000,000			0		(12,000,000	)

(b.) No temporary differences existed at the beginning of the year.
(c.) Pretax accounting income was $200,000,000 and taxable income was $110,000,000 for the year and the tax rate is 40%. Permanent differences are the cause of any difference between pretax accounting income and taxable income that are not due to temporary differences.

Required:
Prepare the journal entry to record the tax provision for the current year.

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