At the beginning of 2025, Kingbird Construction Company changed from the cost-recovery method to recognizing revenue over time(percentage-of-completion) for financial reporting purposes. The company will continue to use the cost-recovery method for taxpurposes. For years prior to 2025, pretax income under the two methods was as follows: percentage-of-completion $150,000, andcost-recovery $90,000. The tax rate is 20%.Prepare Kingbird's 2025 journal entry to record the change in accounting principle. (Credit account titles are automatically indented whenthe amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List alldebit entries before credit entries.)Account Titles and ExplanationDebitCredit

Step 1. Determine the Difference in Pretax Income:Percentage-of-completion method:…

Answered: At the beginning of 2025, Kingbird…

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 4BCRQ

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Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the amount of financial depreciation, resulting in a book value of the depreciable assets of 24,500 for financial reporting purposes and of 20,000 for tax purposes at the end of 2019. In addition, Shadrach recognized a 3,500 estimated liability for legal expenses in the financial statements during 2019; it expects to pay this liability (and deduct it for tax purposes) in 2023. The current tax rate is 30%, no change in the tax rate has been enacted, and the company expects to be profitable in future years. What is the amount of the net deferred tax liability at the end of 2019? a. 300 b. 450 c. 1,050 d. 1,350
Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and taxable income for 2020. The prior period adjustment was the result of an error in calculating bad debt expense for 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. When the company applies intraperiod income tax allocation, the prior period adjustment will be shown on the: a. income statement at 12,000 b. income statement at 8,400 (net of 3,600 income taxes) c. retained earnings statement at 12,000 d. retained earnings statement at 8,400 (net of 3,600 income taxes)
At the beginning of 2025, Whispering Construction Company changed from the cost-recovery method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the cost-recovery method for tax purposes. For years prior to 2025, pretax income under the two methods was as follows: percentage-of-completion $101,000, and cost-recovery $62,620. The tax rate is 20%. Prepare Whispering's 2025 journal entry to record the change in accounting principle. (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 O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit
At the beginning of 2025, Pronghorn Construction Company changed from the cost-recovery method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the cost- recovery method for tax purposes. For years prior to 2025, pretax income under the two methods was as follows: percentage-of-completion $114,200, and cost-recovery $78,200. The tax rate is 40%. Pronghorn has a profit-sharing plan, which pays all employees a bonus at year-end based on 2% of pretax income. Compute the indirect effect of Pronghorn's change in accounting principle that will be reported in the 2025 income statement, assuming that the profit-sharing contract explicitly requires adjustment for changes in income numbers. Indirect effect
At the beginning of 2020, Bramble Construction Company changed from the completed-contract method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2020, pretax income under the two methods was as follows: percentage-of-completion $114,200, and completed-contract $78,200. The tax rate is 40%. Bramble has a profit-sharing plan, which pays all employees a bonus at year-end based on 2% of pretax income.Compute the indirect effect of Bramble’s change in accounting principle that will be reported in the 2020 income statement, assuming that the profit-sharing contract explicitly requires adjustment for changes in income numbers. Indirect effect $enter the Indirect effect in dollars
At the beginning of 2020, Wertz Construction Company changed from the completed-contract method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2020, pretax income under the two methods was as follows: percentage-of-completion $120,000, and completed-contract $80,000. The tax rate is 20%. Prepare Wertz's 2020 journal entry to record the change in accounting principle.
At the beginning of 2020, Buffalo Construction Company changed from the completed-contract method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2020, pretax income under the two methods was as follows: percentage-of-completion $100,000, and completed-contract $60,000. The tax rate is 20%.Prepare Buffalo’s 2020 journal entry to record the change in accounting principle. (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.)
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Sheridan Company reports pretax financial income of $73,500 for 2025. The following items cause taxable income to be different than pretax financial income. Depreciation on the tax return is greater than depreciation on the income statement by $17,600. 1. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $19,900. 3. Fines for pollution appear as an expense of $10,500 on the income statement. Sheridan's tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2025. (a) Your answer is correct. Compute taxable income and income taxes payable for 2025. (b) Taxable income 86300 Income taxes payable 25890 eTextbook and Media Solution Pretax financial income for 2025 $73,500 Excess depreciation per tax return (17,600) Excess rent collected over rent earned 19,900 Nondeductible fines 10,500 Taxable income $86,300 Taxable income $86,300 Enacted tax rate 30%…
Use this information for parts A and B. In 2026, Goodfellas Company reported pretax GAAP income of $400,000. During 2026, Goodfellas had the following differences between GAAP and tax: Recognized $100,000 installment sale revenue under GAAP in 2026. This revenue will be recognized for tax purposes in equal amounts over the next four years. Recognized $50,000 of depreciation in 2026 for tax. Starting in 2027, GAAP depreciation is $10,000 per year for the next five years. Received $100,000 in unearned rent revenue in 2026. Rent will be earned in equal amounts in 2027 and 2028. The tax rate for 2026 is 30 percent and 20 percent thereafter. A) What journal entry does Goodfellas record for taxes in 2026?
The following information is available for Grouper Corporation for 2024 (its first year of operations). 1. 2. 3. 4. (a) Excess of tax depreciation over book depreciation, $41,200. This $41,200 difference will reverse equally over the years 2025-2028. Deferral, for book purposes, of $18,700 of rent received in advance. The rent will be recognized in 2025. Pretax financial income, $319,200. Tax rate for all years, 30%. Compute taxable income for 2024. Taxable income eTextbook and Media List of Accounts Save for Later Attempts: 0 of 1 used Submit Answer
Prepare the income tax expense section of the income statement for 2025, beginning with the line "Income before income taxes." (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) SHERIDAN COMPANY Income Statement (Partial) For the Year Ended December 31, 2025 $

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