e following information was disclosed during the audit of Whispering Inc. Amount Due per Tax Return $129.100 108.600 Year 2020 2021 On January 1, 2020, equipment costing $579.300 is purchased. For financial reporting purposes, the company uses straight-line depreciation over a 5-year life. For tax purposes, the company uses the elective straight-line method over a 5-year life. (Hint: For tax purposes, the half-year convention as discussed in Agpendix 114 must be used.) In January 2021, $214,500 is collected in advance rental of a building for a 3-year period. The entire $214,500 is reported as taxable income in 2021, but $143.000 of the $214,500 is reported as unearned revenue in 2021 for financial reporting purposes. The remaining amount of unearmed revenue is to be recognized equally in 2022 and 2023. The tax rate is 20% in 2020 and all subsequent periods. (Hine: To find taxable income in 2020 and 2021, the related income taxes payable amounts will have to be "grossed up.") No temporary differences existed at the end of 2019. Whispering expects to report taable income in each of the next 5 years. (a) termine the amount to report for deferred income taes at the end of 2020. and indicate how it should be classified on the balance sheet. nount to report for deferred income taxes Whispering In. Balance Sheet ick if vou weuld like to Show Work for this question: Open Show Work
e following information was disclosed during the audit of Whispering Inc. Amount Due per Tax Return $129.100 108.600 Year 2020 2021 On January 1, 2020, equipment costing $579.300 is purchased. For financial reporting purposes, the company uses straight-line depreciation over a 5-year life. For tax purposes, the company uses the elective straight-line method over a 5-year life. (Hint: For tax purposes, the half-year convention as discussed in Agpendix 114 must be used.) In January 2021, $214,500 is collected in advance rental of a building for a 3-year period. The entire $214,500 is reported as taxable income in 2021, but $143.000 of the $214,500 is reported as unearned revenue in 2021 for financial reporting purposes. The remaining amount of unearmed revenue is to be recognized equally in 2022 and 2023. The tax rate is 20% in 2020 and all subsequent periods. (Hine: To find taxable income in 2020 and 2021, the related income taxes payable amounts will have to be "grossed up.") No temporary differences existed at the end of 2019. Whispering expects to report taable income in each of the next 5 years. (a) termine the amount to report for deferred income taes at the end of 2020. and indicate how it should be classified on the balance sheet. nount to report for deferred income taxes Whispering In. Balance Sheet ick if vou weuld like to Show Work for this question: Open Show Work
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 19-08 (Part Level Submission)
The following information was disclosed during the audit of Whispering Inc.
Amount Due
per Tax Return
$129,100
1.
Year
2020
2021
108,600
2. On January 1, 2020, equipment costing $579,300 is purchased. For financial reporting purposes, the company uses straight-line depreciation over a 5-year life. For tax purposes, the company uses the elective straight-line method over a 5-year life. (Hint: For tax purposes, the half-year convention as discussed in Appendix 11A must be used.)
3. In January 2021, $214,500 is collected in advance rental of a building for a 3-year period. The entire $214,500 is reported as taxable income in 2021, but $143,000 of the $214,500 is reported as unearned revenue in 2021 for financial reporting purposes. The remaining amount of unearned revenue is to be recognized equally in 2022 and 2023.
4. The tax rate is 20% in 2020 and all subsequent periods. (Hint: To find taxable income in 2020 and 2021, the related income taxes payable amounts will have to be "grossed up.")
5. No temporary differences existed at the end of 2019. Whispering expects to report taxable income in each of the next 5 years.
- (a)
Determine the amount to report for deferred income taxes at the end of 2020, and indicate how it should be classified on the balance sheet.
Amount to report for deferred income taxes
Whispering Inc.
Balance Sheet
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