Blossom Limited had investments in securities on its SFP for the first time at the end of its fiscal year ended December 31, 2023. Blossom reports under IFRS and its investments in securities are to be accounted for at fair value through net income. During 2023, realized losses and gains on the trading of shares and bonds resulted in investment income, which is fully taxable in the year. Blossom also accrued unrealized gains at December 31, 2023, which are not taxable until the investment securities are sold. The portfolio of trading securities had an original cost of $316,300 and a fair value on December 31, 2023, of $320,200. The entry recorded by Blossom on December 31, 2023, was as follows: FV-NI Investments 3,900 Investment Income or Loss 3,900 Following the year ended December 31, 2023, Blossom continued to actively trade its securities investments until the end of its 2024 fiscal year, when it was forced to sell several of them at a loss, because it needed cash for operations. By December 31, 2024, the portfolio of investments contained a single investment in shares, which was purchased in November 2024. Blossom had paid $42,300 for these remaining shares. At December 31, 2024, the shares' market value was $40,000. Income before income tax for Blossom was $129,500 for the year ended December 31, 2024. There are no other permanent or reversing/timing differences in arriving at the taxable income for Blossom for the fiscal year ended December 31, 2024. The enacted tax rate for 2024 and future years is 30%. (c) Prepare the journal entries to record income taxes for 2024. Assume that there have been no entries to the ending balances of deferred taxes reported at December 31, 2023. and the income statement and SFP presentation for 2024 (d) Prepare the journal entries to record income tax for 2024. Assume that, late in 2024, the income tax rate changed to 25% for 2025 and subsequent years.
Blossom Limited had investments in securities on its SFP for the first time at the end of its fiscal year ended December 31, 2023. Blossom reports under IFRS and its investments in securities are to be accounted for at fair value through net income. During 2023, realized losses and gains on the trading of shares and bonds resulted in investment income, which is fully taxable in the year. Blossom also accrued unrealized gains at December 31, 2023, which are not taxable until the investment securities are sold. The portfolio of trading securities had an original cost of $316,300 and a fair value on December 31, 2023, of $320,200. The entry recorded by Blossom on December 31, 2023, was as follows: FV-NI Investments 3,900 Investment Income or Loss 3,900 Following the year ended December 31, 2023, Blossom continued to actively trade its securities investments until the end of its 2024 fiscal year, when it was forced to sell several of them at a loss, because it needed cash for operations. By December 31, 2024, the portfolio of investments contained a single investment in shares, which was purchased in November 2024. Blossom had paid $42,300 for these remaining shares. At December 31, 2024, the shares' market value was $40,000. Income before income tax for Blossom was $129,500 for the year ended December 31, 2024. There are no other permanent or reversing/timing differences in arriving at the taxable income for Blossom for the fiscal year ended December 31, 2024. The enacted tax rate for 2024 and future years is 30%. (c) Prepare the journal entries to record income taxes for 2024. Assume that there have been no entries to the ending balances of deferred taxes reported at December 31, 2023. and the income statement and SFP presentation for 2024 (d) Prepare the journal entries to record income tax for 2024. Assume that, late in 2024, the income tax rate changed to 25% for 2025 and subsequent years.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Blossom Limited had investments in securities on its SFP for the first time at the end of its fiscal year ended December 31, 2023.
Blossom reports under IFRS and its investments in securities are to be accounted for at fair value through net income. During 2023,
realized losses and gains on the trading of shares and bonds resulted in investment income, which is fully taxable in the year. Blossom
also accrued unrealized gains at December 31, 2023, which are not taxable until the investment securities are sold. The portfolio of
trading securities had an original cost of $316,300 and a fair value on December 31, 2023, of $320,200. The entry recorded by
Blossom on December 31, 2023, was as follows:
FV-NI Investments
3,900
Investment Income or Loss
3,900
Following the year ended December 31, 2023, Blossom continued to actively trade its securities investments until the end of its 2024
fiscal year, when it was forced to sell several of them at a loss, because it needed cash for operations. By December 31, 2024, the
portfolio of investments contained a single investment in shares, which was purchased in November 2024. Blossom had paid $42,300
for these remaining shares. At December 31, 2024, the shares' market value was $40,000. Income before income tax for Blossom was
$129,500 for the year ended December 31, 2024. There are no other permanent or reversing/timing differences in arriving at the
taxable income for Blossom for the fiscal year ended December 31, 2024. The enacted tax rate for 2024 and future years is 30%.
Transcribed Image Text:(c) Prepare the journal entries to record income taxes for 2024. Assume that there have
been no entries to the ending balances of deferred taxes reported at December 31,
2023. and the income statement and SFP presentation for 2024
(d) Prepare the journal entries to record income tax for 2024. Assume that, late in 2024,
the income tax rate changed to 25% for 2025 and subsequent years.
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