EXERC13 Calculating Deferred Income Taxes.The Harmon Corporation prepared the following income statements TA 2and income tax returns for Year 1 through Year 4.Income StatementSales...Operating expenses..Pretax net income.Provisions for income taxes.Net income..Income Tax ReturnSales....Operating expenses...Taxable incomeIncome tax payable ...After-tax net income....I....Year 1$1,000650350140$ 210Year 1$1,000900SA$1008020Year 2$1,000650350140$ 210Year 2$1,000900100Hoy 80$20Year 3$1,000650350140$ 210Year 3$1,000400$1,000650$350140|210Year 4$1,000400600600200200$ 400 $ 400von Wand Insol aCalculate the balance in the company's deferred income tax liability account at the end of each year. Explainwhat a growing balance in the deferred income tax liability is likely to indicate about a company's net incomerelative to its taxable income. Why might investment professionals view this situation positively? Negatively?uses straight-line depreciationTA 2HomeworkMBO

Deferred tax liability (DTL) shows temporary differences between tax on accounting income and tax on…

EXERC 13 Calculating Deferred Income Taxes. The Harmon Corporation prepared the following income statements and income tax returns for Year 1 through Year 4. Income Statement Sales. Operating expenses. Pretax net income. Provisions for income taxes Net income Income Tax Return Sales. Operating expenses. Taxable income Income tax payable After-tax net income. Year 1 $1,000 650 350 140 $ 210 Year 2 $1,000 1650 Year 1 $1,000 900 350 140 $ 210 Year 2 $1,000 900 1000 100 Year 3 $1,000 650 350 140 $ 210 Year 3 $1,000 400 600 200 $1,000 650 350 140 $ 210 Year 4 $1,000 400 600 200 8080 $ 20 $ 20 $ 400 $ 400 TA 2 Calculate the balance in the company's deferred income tax liability account at the end of each year. Explain what a growing balance in the deferred income tax liability is likely to indicate about a company's net income relative to its taxable income. Why might investment professionals view this situation positively? Negatively? muuces straight-line depreciation

EXERC 13 Calculating Deferred Income Taxes. The Harmon Corporation prepared the following income statements and income tax returns for Year 1 through Year 4. Income Statement Sales. Operating expenses. Pretax net income. Provisions for income taxes Net income Income Tax Return Sales. Operating expenses. Taxable income Income tax payable After-tax net income. Year 1 $1,000 650 350 140 $ 210 Year 2 $1,000 1650 Year 1 $1,000 900 350 140 $ 210 Year 2 $1,000 900 1000 100 Year 3 $1,000 650 350 140 $ 210 Year 3 $1,000 400 600 200 $1,000 650 350 140 $ 210 Year 4 $1,000 400 600 200 8080 $ 20 $ 20 $ 400 $ 400 TA 2 Calculate the balance in the company's deferred income tax liability account at the end of each year. Explain what a growing balance in the deferred income tax liability is likely to indicate about a company's net income relative to its taxable income. Why might investment professionals view this situation positively? Negatively? muuces straight-line depreciation

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 32BEB

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(1) Prepare the statement of income during Year 1. Pre-tax financial income Income tax expense-current Income tax expense-deferred Net income Effective tax rate (2) Prepare the tax accounts section of balance sheet as of December 31, Year 1. |Income tax payable Deferred tax assets Deferred tax liabilities
Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions. Code Letter Term Code Letter Term A. Future deductible amount H Deferred tax consequences B Income tax payable (or refund) I Future taxable amount Operating loss carryback Deferred tax liability D Valuation allowance K Temporary difference E Deferred tax asset Income tax expense (or benefit) F Operating loss carryforward M Deferred tax expense (or benefit) Taxable income Required: Indicate which term belongs with each definition by choosing the correct term. 1. The deferred tax consequences of future deductible amounts and operating loss carryforwards 2. A difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively X 3. Temporary…
To compute the provision for income tax, the following 3. What amount of income tax payable should be reported? 4. What amount of total tax expense should be reported: Fecorino Company had pretaxr financial income of P2,500,00g The entity made corporate estimated tax payment in the Tax depreciation in excess of financial statement amount 160,000 Problem 16-30 in the current year. amount of 180, 000 during the current year. information was provided: S60,000 Interest income received Tax depreciation in excess of financial statement amount 280,000 S0% Rent received in advance Corporate tax rate 1. What amount of permanent difference between boo income and taxable income existed at year-end? a. 520,000 b. 360,000 c. 800,000 d. 280,000 2. What amount of current tax expense should be reported? a. 786,000 b. 510,000 c. 750,000 d. 678,000 3. What amount of income tax pavable should be reporer a. 498,000 b. 606,000 c. 330,000 d. 570,000 a. 714,000 b. 726,000 c. 642,000 d. 594,000
A. Compute for the Net Taxable Income and Personal Income Tax. 1. A. Annual Basic Salary B. 13th Month Pay and Other Benefits C. Mandatory Contributions D. Annual Gross Income (A+B) E. Deductions and Exemptions (B+C) P 397,860.00 33,155.00 6,542.00 Net Taxable income (D-E) Personal Income Tax B. Compute for the 4 general deductions of the following employees: 1. A sales manager in Kopimo, Inc., a private company, earning P42,000 monthly with sales commission of P36,000 for the year. 2. A public school teacher earning P24,495 monthly with chalk allowance of P1,500, uniform allowance of P6,000 and performance bonus of P12,000. 3. An IT manager in Accentuate Corp., a private company, earning P55,000 monthly and laundry allowance of P15,000 for the whole year. C. Basic Applications. Solve for the following: 1. Conchita works as a service crew member in a fast-food chain in a mall. She has an hourly wage rate of P50. Her rest days are every Wednesday and Saturday. Consider the following…
Calculating Deferred Income Taxes The Sample Corporation prepared the following income statements and income tax returns for Year 1 through Year 4. Income Statement Sales Operating expenses Pretax net income Provisions for income taxes Net income Year 1 Year 2 Year 3 Year 4 $1,000 $1,000 $1,000 $1,000 650 650 650 650 $350 $350 $350 $350 195 195 195 195 $155 $155 $155 $155 Income Tax Return Year 1 Sales $1,000 Year 2 Year 4 $1,000 $1,000 Operating expenses 900 900 400 400 Taxable income $100 $100 $600 $600 310 Income tax payable 80 80 310 After-tax net income $20 $20 $290 $290 Year 3 $1,000 $ Calculate the balance in the company's deferred income tax liability account at the end of each year. Year 1 0 x Year 2 $ 0 x Year 3 $ 0 x Year 4 $ 0✓
7. Consider the following excerpts from the income statement and tax returns of Rashford Inc. Amounts in $ Income before taxes Taxable income a. 22.4% b. 19.6% Income statement Depreciation 200 Warranty expenses* 120 Fine 100 *Warranty expenditures are tax deductible when payments are made to fulfil the warranty. C. 23.38% d. 17.92% e. None of the above 1,500 ANSWER: A Tax returns The statutory tax rate is 21%. There are no temporary or permanent differences other than the ones listed in the table. The effective tax rate of Rashford Inc. is: ? 250 0 0
es Required: Determine the amount of average income tax liability per tax return, for each income range provided, using the information in the below table. Taxable Income and Total Tax Liability are in thousands. Note: Enter your answers in whole dollars and not in thousands. Round the final answers to the nearest dollar value. Item Number of returns Taxable income Total tax liability Average tax rate* Ranges of Adjusted Gross Income $15,000 to under $30,000 27,410,421 $ 189,345,926 $ 15,590,244 Under $15,000 30,714,603 $ 5,388,125 $ 532,117 9.88% *The average tax rate is total tax liability divided by taxable income. Under $15,000 $15,000 to under $30,000 $30,000 to under $50,000 $50,000 to under $100,000 $100,000 to under $200,000 $200,000 or more $30,000 to under $50,000 to under $50,000 $100,000 37,547,454 28,926,296 $ 1,912,925,663 $ 639,289,718 $215,589,667 $56,077,985 8.23% 8.77% 11.27% $100,000 to under $200,000 24,180,226 $ 2,687,818, 279 $385,658,662 14.35% $200,000 or more…
Find the amounts that are missing from this summary of an income tax return: a. Gross income $42,685 b. Adjustments to income $3,670 c. Adjusted gross income d. Deductions $8,978 e. Adjusted gross income less deductions f. Exemptions (4 $3,100) $12,400 g. Taxable income Vince Bottolito's adjusted gross income on his federal tax return was $53.748. He claimed the standard deduction of $4,850, and one exemption at $3,100. What was Vince's taxable income? The Valek's gross income last vear was $64.890. They had adjustments to income totaling S3.829. Their deductions totaled $12.502. and they had four exemptions at S3.100 each. Find their taxable income.
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Accounting profit is O A. The The profit or loss is for a period determined before deducting in accordance tax expense O B. The profit or loss is for a period determined in accordance with tax law C. The profit or loss after for a period after deducting tax expense O D. The profit or loss after current tax expense determined accordance with tax law
The recognition of current tax under AASB 112/IAS 12 Income Taxes is based on the following. a. the total income tax expense for the current period. b. the prima facie tax on accounting profit before tax for the current period. c. the tax on taxable profit of the current period that is due to the taxation authorities including amounts paid during the period and amounts payable or receivable at the end of the period. d. the amount of income tax payable to, or receivable from, the taxation authorities at the end of the current period
Date 6. The percent of gross income that is deducted for income tax usually depends on the amount earned. Different ranges of income have different amounts of taxes deducted. Complete the following tables. Range of Annual Gross Income Percent of Taxable Income Going to Federal Income Tax from $0 to $ from $ to $ from $ to $ Income over $ Percent of Taxable Range of Annual Gross Income Going to Income Provincial Income Tax from $0 to $ from $ from $ Income over $ to $ to $