Dix Company reported operating income (loss) before income tax in its first three years of operations as follows: 20X1 20X2 20X3 $ 100,000 (200,000) 240,000 Dix had no permanent or temporary differences between book income and taxable income in these years. Assume a 21% tax rate for all years, and assume there is no valuation allowance. Required: 1. What amount of deferred tax asset should Dix report on its December 31, 20X2, balance sheet? 2. What amount should Dix report as a tax benefit on its 20X2 income statement? 3. What amount of taxes does Dix pay related to its 20X3 tax return? Amount 1. Deferred tax asset reported in December 31, 20X2 balance sheet $ 42,000 2. Tax benefit recognized in 20X2 income statement $ 42,000 3. Amount of taxes paid related to 20X3 tax return $ 8,400
Dix Company reported operating income (loss) before income tax in its first three years of operations as follows: 20X1 20X2 20X3 $ 100,000 (200,000) 240,000 Dix had no permanent or temporary differences between book income and taxable income in these years. Assume a 21% tax rate for all years, and assume there is no valuation allowance. Required: 1. What amount of deferred tax asset should Dix report on its December 31, 20X2, balance sheet? 2. What amount should Dix report as a tax benefit on its 20X2 income statement? 3. What amount of taxes does Dix pay related to its 20X3 tax return? Amount 1. Deferred tax asset reported in December 31, 20X2 balance sheet $ 42,000 2. Tax benefit recognized in 20X2 income statement $ 42,000 3. Amount of taxes paid related to 20X3 tax return $ 8,400
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter3: Taxes On The Financial Statements
Section: Chapter Questions
Problem 4BCRQ
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Question
Transcribed Image Text:Dix Company reported operating income (loss) before income tax in its first three years of operations as follows:
20X1
20X2
20X3
$ 100,000
(200,000)
240,000
Dix had no permanent or temporary differences between book income and taxable income in these years. Assume a 21% tax rate for
all years, and assume there is no valuation allowance.
Required:
1. What amount of deferred tax asset should Dix report on its December 31, 20X2, balance sheet?
2. What amount should Dix report as a tax benefit on its 20X2 income statement?
3. What amount of taxes does Dix pay related to its 20X3 tax return?
Amount
1. Deferred tax asset reported in December 31, 20X2 balance sheet
$
42,000
2. Tax benefit recognized in 20X2 income statement
$
42,000
3. Amount of taxes paid related to 20X3 tax return
$
8,400
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