Crane Corporation has one temporary difference at the end of 2025 that will reverse and cause taxable amounts of $56,400 in 2026, $61,800 in 2027, and $66,400 in 2028. Crane's pretax financial income for 2025 is $278,300, and the tax rate is 40% for all years. There are no deferred taxes at the beginning of 2025. (a) Compute taxable income and income taxes payable for 2025. Taxable income Income taxes payable $

Crane Corporation has one temporary difference at the end of 2025 that will reverse and cause taxable amounts of $56,400 in 2026, $61,800 in 2027, and $66,400 in 2028. Crane's pretax financial income for 2025 is $278,300, and the tax rate is 40% for all years. There are no deferred taxes at the beginning of 2025. (a) Compute taxable income and income taxes payable for 2025. Taxable income Income taxes payable $

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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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Crane
years.
(a)
Corporation has one temporary difference at the end of 2025 that will reverse and cause taxable amounts of $56,400 in 2026, $61,800 in 2027, and $66,400 in 2028. Crane's pretax financial income for 2025 is $278,300, and the tax rate is 40% for all
There are no deferred taxes at the beginning of 2025.
Compute taxable income and income taxes payable for 2025.
Taxable income
$
Income taxes payable $

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(b)
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2025. (List all
debit entries before credit entries. 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 O for the amounts.)
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