Concord Inc. had accounting income of $159,600 in 2023. Included in the calculation of that amount is the CEO's life insurance expense of $6,000, which is not deductible for tax purposes. In addition, the UCC for tax purposes is $13,000 lower than the net carrying amount of the property, plant, and equipment, although the amounts were equal at the beginning of the year. Prepare Concord's journal entry to record 2023 income tax. Assume that Concord has a tax rate of 25% and that Concord uses the taxes payable method of accounting for income taxes under ASPE. (List debit entry before credit entry. 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.)

Concord Inc. had accounting income of $159,600 in 2023. Included in the calculation of that amount is the CEO's life insurance expense of $6,000, which is not deductible for tax purposes. In addition, the UCC for tax purposes is $13,000 lower than the net carrying amount of the property, plant, and equipment, although the amounts were equal at the beginning of the year. Prepare Concord's journal entry to record 2023 income tax. Assume that Concord has a tax rate of 25% and that Concord uses the taxes payable method of accounting for income taxes under ASPE. (List debit entry before credit entry. 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.)

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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Howard Property and Casualty Insurance Corporation reported a net operating loss of $160,000 for financial reporting and tax purposes in 2019. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Howard's first two years of operation were as follows: 12017: 80,000 40% 2018: 20,000 25% Assume NOL is allowed to carry back for two years, the amount of net loss reported on the income statement for the year ended December 31, 2019 would be: (114,000) (96,000) (120,000) (108,000)
For the year ended December 31, 2019, Nelson Co.’s income statement showed income of $425,000 before income tax expense. To compute taxable income, the following differences were noted: Income from tax-exempt municipal bonds $60,000 Depreciation deducted for tax purposes in excess of depreciation recorded on the books 130,000 Proceeds received from life insurance on death of an insured employee 100,000 Corporate tax rate for 2019 30% Enacted tax rate for future periods 35% Required: 1. Calculate taxable income and tax payable for tax purposes. 2. Prepare Nelson’s income tax journal entry at the end of 2019.
At the end of the current year, Newsmax Incorporated has $400,000 of subscriptions received in advance included in its balance sheet. A disclosure note reveals that the entire $400,000 will be recognized in the income statement in the next year. In the absence of other temporary differences, in the balance sheet one would also expect to find a: a- Current deferred tax asset b- Non-current deferred tax asset c- Current deferred tax liability d- Non-current deferred tax liability
Splish Company reports pretax financial income of $65,800 for 2020. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $16,700. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $20,500. 3. Fines for pollution appear as an expense of $10,200 on the income statement. Splish'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 2020. (a) Compute taxable income and income taxes payable for 202O. Taxable income Income taxes payable %24 %24
Hurricane Ltd reports financial income of $100,000 for 2019. The following items cause taxable income to bedifferent than pre-tax financial income:1. Depreciation on the tax return is greater than depreciation on the income statement by $26,0002. Rent collected on the tax return is greater than rent earned on the income statement by $17,0003. Fines for pollution appear as an expense of $1,000 on the income statement. Hurricane Ltd tax rate is 30% for all years, and the company expects to report taxable income in allfuture years. There are no deferred taxes at the beginning of 2019. Required: According to IAS 12 Income Taxes 1. Prepare the journal entry to record income tax expense, deferred taxes and income taxes payable for2019. Clearly label them as deferred tax asset or liability.
Caramel Corp's 2023 income statement showed pretax accounting income of $2,500,000. To compute the federal income tax liability, the following 2023 data are provided: Income from exempt municipal bonds- $100,000 Depreciation deducted for tax purposes in excess of depreciation deducted for financial statement purposes- $200,000 Income Tax Rate- 20% The entry to record Caramel Corp's income tax expense and income tax payable for 2023 will include
Assume the following facts for Munoz Company in 2019. Munoz reported pretax financial income of $800,000. In addition, Munoz reported the following differences between its pretax financial income and taxable income: • Interest income of $100,000 was received during 2019 from an investment in municipal bonds. This income is exempt for tax purposes. • Rent income of $60,000 was collected in 2018 and included for tax purposes during that year. For financial statement purposes, it will be reported as earned equally in 2019 and 2020. • An asset with a 5-year life was purchased during 2019; straight-line depreciation for book purposes was $50,000. MACRS depreciation expense for 2019 was $120,000. • Warranty expense of $20,000 was recognized on the 2019 income statement, while $6,000 was recognized for tax purposes. (Assume a 1-year warranty contract.) The balance of the Deferred Tax Asset account (debit) at January 1, 2019, was $24,000 as a result of the rent income temporary…
Sandhill Corp. follows IFRS and began operations in 2023 and reported accounting income of $273,000 for the year. Sandhill's CCA exceeded its book depreciation by $39,200. Sandhill's tax rate for 2023 and years thereafter is 30%. Assume that the $39,200 difference is the only difference between Sandhill's accounting income and taxable income. Prepare the journal entries to record the current tax expense, deferred tax expense, income tax payable, and the deferred tax liability. (List all debit entries before credit entries. 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.) Date December 31, 2023 December 31, 2023 Account Titles and Explanation (To record current tax expense) (To record deferred tax expense) II Debit Credit
In 2025 Vaughn Corporation had pretax financial income of $185,000 and taxable income of $117,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 30%. Compute the amount to be reported as income taxes payable at December 31, 2025
Assume the following facts for Munoz Company in 2019. Munoz reported pretax financial income of $800,000. In addition, Munoz reported the following differences between its pretax financial income and taxable income: • Interest income of $60,000 was received during 2019 from an investment in municipal bonds. This income is exempt for tax purposes. • Rent income of $40,000 was collected in 2018 and included for tax purposes during that year. For financial statement purposes, it will be reported as earned equally in 2019 and 2020. • An asset with a 5-year life was purchased during 2019; straight-line depreciation for book purposes was $50,000. MACRS depreciation expense for 2019 was $100,000. • Warranty expense of $20,000 was recognized on the 2019 income statement, while $4,000 was recognized for tax purposes. (Assume a 1-year warranty contract.) The balance of the Deferred Tax Asset account (debit) at January 1, 2019, was $16,000 as a result of the rent income temporary…
Accounting Exile Corporation has operating income of $42,000 and operating expenses of $69,000 in 2021. In 2022, it generates operating income of $85,000 and operating expenses of $74,000. What is Exile’s 2022 taxable income, as reported on its Form 1120?