Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences:                                                                                                                                         ($ in thousands)                                                                                                                                 _____    Situation________                                                                                  1                 2                   3                      4  Taxable income                                                    $100          $232             $228                $308  Future deductible amounts                                    16                                    20                    20  Future taxable amounts                                                            16                  16                    44 Balance (s) at beginning of the year:     Deferred tax asset                                                    2                                    13                      4     Deferred tax liability                                                                   8                    2     The enacted tax rate is 25%   Required: For each situation, determine the following: (Enter your answers in thousands rounded to one decimal place (i.e. 1,200 should be entered as 1.2). Negative amounts should be indicated by a minus sign. Leave no cell blank, enter “O” Wherever applicable.)                                                                                                     _____________   Situation__________________                                                                                                            1                 2               3               4 A    Income tax payable currently.                                   ____          ____         ____         ____ B    Deferred tax asset—ending balance.                       _____        _____       _____       _____ C    Deferred tax asset---change.                                     _____         _____      ______     ______ D    Deferred tax liability—ending balance.                   _____        ______     ______     _____ E     Deferred tax liability---- change.                               _____        ______    ______      ______ F     Income tax expense.                                                       _____        ______     ______     ______

SWFT Comprehensive Volume 2019
42nd Edition
ISBN:9780357233306
Author:Maloney
Publisher:Maloney
Chapter22: S Corporations
Section: Chapter Questions
Problem 9DQ
icon
Related questions
Question

Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences:

 

                                                                                                                                      ($ in thousands)

                                                                                                                                _____    Situation________

                                                                                 1                 2                   3                      4

 Taxable income                                                    $100          $232             $228                $308

 Future deductible amounts                                    16                                    20                    20

 Future taxable amounts                                                            16                  16                    44

Balance (s) at beginning of the year:

    Deferred tax asset                                                    2                                    13                      4

    Deferred tax liability                                                                   8                    2

 

 

The enacted tax rate is 25%

 

Required:

For each situation, determine the following: (Enter your answers in thousands rounded to one decimal place (i.e. 1,200 should be entered as 1.2). Negative amounts should be indicated by a minus sign. Leave no cell blank, enter “O” Wherever applicable.)

 

                                                                                                  _____________   Situation__________________

                                                                                                           1                 2               3               4

A    Income tax payable currently.                                   ____          ____         ____         ____

B    Deferred tax asset—ending balance.                       _____        _____       _____       _____

C    Deferred tax asset---change.                                     _____         _____      ______     ______

D    Deferred tax liability—ending balance.                   _____        ______     ______     _____

E     Deferred tax liability---- change.                               _____        ______    ______      ______

F     Income tax expense.                                                       _____        ______     ______     ______ 

Expert Solution
Step 1

The deferred tax liability arises when there is a line item in the balance sheet on which income taxes are not required to be paid now but will be paid in the future. The cash flows for tax are lower in the current period because some portion of taxes is paid in the future.

trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Accounting for Income Taxes
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
SWFT Comprehensive Volume 2019
SWFT Comprehensive Volume 2019
Accounting
ISBN:
9780357233306
Author:
Maloney
Publisher:
Cengage
SWFT Corp Partner Estates Trusts
SWFT Corp Partner Estates Trusts
Accounting
ISBN:
9780357161548
Author:
Raabe
Publisher:
Cengage
SWFT Comprehensive Vol 2020
SWFT Comprehensive Vol 2020
Accounting
ISBN:
9780357391723
Author:
Maloney
Publisher:
Cengage