Case Development began operations in December 2018. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2018 installment income was $780,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2019–2021 are as follows: $186,000 30% 340, 000 254, 000 2019 2020 40 2021 40 Case also had product warranty costs of $98,000 expensed for financial reporting purposes in 2018. For tax purposes, only the $29,000 of warranty costs actually paid in 2018 was deducted. The remaining $69,000 will be deducted for tax purposes when paid over the next three years as follows: 2019 $23,600 30% 2020 28,600 40 16,800 40 2021 Pretax accounting income for 2018 was $1,080,000, which includes interest revenue of $28,000 from municipal bonds. The enacted tax rate for 2018 is 30%

Case Development began operations in December 2018. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2018 installment income was $780,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2019–2021 are as follows: $186,000 30% 340, 000 254, 000 2019 2020 40 2021 40 Case also had product warranty costs of $98,000 expensed for financial reporting purposes in 2018. For tax purposes, only the $29,000 of warranty costs actually paid in 2018 was deducted. The remaining $69,000 will be deducted for tax purposes when paid over the next three years as follows: 2019 $23,600 30% 2020 28,600 40 16,800 40 2021 Pretax accounting income for 2018 was $1,080,000, which includes interest revenue of $28,000 from municipal bonds. The enacted tax rate for 2018 is 30%

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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PT BCD has a deferred tax asset account with a balance of Rp300.000 at the end of 2018 due to a single cumulative temporary difference of Rp750.000. At the end of 2019, this same temporary difference has increased to a cumulative amount of Rp1.000.000. Taxable income for 2019 is Rp1.700.000. The tax rate is 40% for all years. Assuming it’s probable that 70% of the deferred tax asset will be realized, what amount will be reported on ABC’s statement of financial position for the deferred tax asset at December 31, 2019?
Sherrod, Inc., reported pretax accounting income of $70 million for 2021. The following information relates to differences between pretax accounting income and taxable income: Income from installment sales of properties included in pretax accounting income in 2021 exceeded that reported for tax purposes by $4 million. The installment receivable account at year-end 2021 had a balance of $6 million (representing portions of 2020 and 2021 installment sales), expected to be collected equally in 2022 and 2023. Sherrod was assessed a penalty of $1 million by the Environmental Protection Agency for violation of a federal law in 2021. The fine is to be paid in equal amounts in 2021 and 2022. Sherrod rents its operating facilities but owns one asset acquired in 2020 at a cost of $60 million. Depreciation is reported by the straight-line method, assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the first two years but…
Required information [The following information applies to the questions displayed below.] Glennelle's Boutique Inc. operates in a city in which real estate tax bills for one year are issued in May of the subsequent year. Thus, tax bills for 2019 are issued in May 2020 and are payable in July 2020. c-2. Assume that the actual tax bill, received in May 2020, was for $7,500. Record the journal entry to show the effects of the appropriate adjustment to the amount previously accrued. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 1 No Event 1 X Answer is complete but not entirely correct. General Journal Real estate tax expense Real estate taxes payable Debit 2,500 X Credit 2,500 x O Apr 8
Arndt, Inc. reported the following for 2021 and 2022 ($ in millions): 2021 2022 Revenues $ 888 $ 980 Expenses 760 800 Pretax accounting income (income statement) $ 128 $ 180 Taxable income (tax return) $ 116 $ 200 Tax rate: 25% Expenses each year include $30 million from a two-year casualty insurance policy purchased in 2021 for $60 million. The cost is tax deductible in 2021. Expenses include $2 million insurance premiums each year for life insurance on key executives. Arndt sells one-year subscriptions to a weekly journal. Subscription sales collected and taxable in 2021 and 2022 were $33 million and $35 million, respectively. Subscriptions included in 2021 and 2022 financial reporting revenues were $25 million ($10 million collected in 2020 but not recognized as revenue until 2021) and $33 million, respectively. Hint: View this as two temporary differences—one reversing in 2021; one originating in 2021. 2021…
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Sunland, Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Installment income of $2700000 will be collected in the following years when the enacted tax rates are: Collection of Income Enacted Tax Rates 2024 $240000 25% 2025 540000 20% 2026 846000 20% 2027 1074000 15% The installment income is Sunland's only temporary difference. What amount should be reported as a deferred income tax liability in Sunland's December 31, 2024 balance sheet? $675000 ○ $615000 ○ $507300 ○ $438300
Asam lects $220 million in withheld and estimated income tax payments during the 2022 calendar year and an additional $20 million in wted and estimated income tax payments in January 2023 applicable to its 2022 calendar year. The state also expects to receive $6 million payments and refunt claims of 15 million for 2022 income tax returns filed by April 15, 2023. The state considers payments received who aretus led by April 15 to be available and refund claims received by that date are considered liabilities for 2022. Now much revenue should the state report for its year ending December 31, 2022? OLXW silion
Dunn, Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method of accounting for income tax purposes. Installment income of $3,000,000 will be collected in the following years when the enacted tax rates are: Collection of Income Enacted Tax Rates 2020 $300,000 25% 2021 600,000 20% 2022 900,000 20% 2023 1,200,000 15% The installment income is Dunn's only temporary difference. What amount should be included in the deferred income tax liability in Dunn's December 31, 2020 balance sheet? a. $480,000 b. $555,000 c. $675,000 d. $750,000
ABC Inc. has asked you to assist in the completion of their 2018 tax provision. They have provided you with the following information; NBV at 12/31/2017 $600,000 UCC at 12/31/2017 320,000 Warranty provision 80,000 Tax rate 45% The following transactions occurred during 2018: Income before taxes $1,600,000 Depreciation 160,000 Warranty provision 50,000 Actual warranty expenditures 70,000 Class 8 additions 200,000 Disallowed entertainment 75,000 Dividends from a taxable Canadian corporation 100,000 REQUIRED 1. Prepare a reconciliation of accounting income to income for tax purposes 2. Prepare the journal entries to record the 2018 tax provision
1. Excess of tax depreciation over book depreciation, $40,000. This $40,000 difference will reverse equally over the years 2017-2020. 2. Deferral, for book purposes, of $20,000 of rent received in advance. The rent will be recognized in 2017. 3. Pretax financial income, $300,000. 4. Tax rate for all years, 40%. Instructions (a) Compute taxable income for 2016. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016. (c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, assuming taxable income of $325,000.
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