build a road for the municipality of Cochrane West. It is estimated that the project will be completed over a three-year period starting in June 2023. Carla Vista uses the percentage-of-completion method of recognizing revenue on its long-term construction contracts. For tax purposes, and in order to postpone the tax on such revenue for as long as possible, Carla Vista uses the completed-contract method allowed by the CRA. For the second year of operations, Carla Vista made progress on the construction of the road for the municipality. The account balances at December 31, 2024, for the construction project and the accounting and tax balances of accounts related to the equipment used for construction follow. (The balances at December 31, 2023, are also listed.) Accounts Receivable Asset/Liability (net of billings to date of $823,100 and $402,400) Revenue from Long-Term Contracts Construction Expenses Equipment Accumulated Undepreciated Capital Cost Depreciation-Equipment (a) 2024 $105,800 126,000 444,100 411,200 Deferred tax 1,103,900 461,500 624,500 Calculate the deferred tax asset or liability balances at December 31, 2024. $ Carla Vista's tax rate is 25% for 2023 and subsequent years. Income before income tax for the year ended December 31, 2023, was $197,800 and for December 31, 2024, was $126,000. 2023 $321,200 102,600 505,000 350,700 1,103,900 171,200 982,600
build a road for the municipality of Cochrane West. It is estimated that the project will be completed over a three-year period starting in June 2023. Carla Vista uses the percentage-of-completion method of recognizing revenue on its long-term construction contracts. For tax purposes, and in order to postpone the tax on such revenue for as long as possible, Carla Vista uses the completed-contract method allowed by the CRA. For the second year of operations, Carla Vista made progress on the construction of the road for the municipality. The account balances at December 31, 2024, for the construction project and the accounting and tax balances of accounts related to the equipment used for construction follow. (The balances at December 31, 2023, are also listed.) Accounts Receivable Asset/Liability (net of billings to date of $823,100 and $402,400) Revenue from Long-Term Contracts Construction Expenses Equipment Accumulated Undepreciated Capital Cost Depreciation-Equipment (a) 2024 $105,800 126,000 444,100 411,200 Deferred tax 1,103,900 461,500 624,500 Calculate the deferred tax asset or liability balances at December 31, 2024. $ Carla Vista's tax rate is 25% for 2023 and subsequent years. Income before income tax for the year ended December 31, 2023, was $197,800 and for December 31, 2024, was $126,000. 2023 $321,200 102,600 505,000 350,700 1,103,900 171,200 982,600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please Complete explanation and do not give solution in image format
Transcribed Image Text:Carla Vista Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company won a contract to
build a road for the municipality of Cochrane West. It is estimated that the project will be completed over a three-year period starting
in June 2023. Carla Vista uses the percentage-of-completion method of recognizing revenue on its long-term construction contracts.
For tax purposes, and in order to postpone the tax on such revenue for as long as possible, Carla Vista uses the completed-contract
method allowed by the CRA. For the second year of operations, Carla Vista made progress on the construction of the road for the
municipality. The account balances at December 31, 2024, for the construction project and the accounting and tax balances of
accounts related to the equipment used for construction follow. (The balances at December 31, 2023, are also listed.)
Accounts Receivable
Asset/Liability (net of billings to date of $823,100 and $402,400)
Revenue from Long-Term Contracts
Construction Expenses
Equipment
Accumulated
Depreciation-Equipment
Undepreciated Capital Cost
(a)
2024
$105,800
Deferred tax
126,000
$
444,100
411,200
1,103,900
461,500
624,500
Calculate the deferred tax asset or liability balances at December 31, 2024.
Carla Vista's tax rate is 25% for 2023 and subsequent years. Income before income tax for the year ended December 31, 2023, was
$197,800 and for December 31, 2024, was $126,000.
2023
$321,200
102,600
505,000
350,700
1,103,900
171,200
982,600
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