In 2023, Carla Vista Corporation, which follows IFRS, discovered that equipment purchased on January 1, 2021, for $152,200 wasexpensed in error at that time. The equipment should have been depreciated over five years, with no residual value. The tax rate is30%.Prepare a single journal entry for 2023 to correct the error and record 2023 depreciation. Assume income and capital cost allowancewas reported accurately for tax purposes in all years. (List all debit entries before credit entries. Credit account titles are automaticallyindented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for theamounts.)Account Titles and ExplanationEquipmentDeferred Tax LiabilityDepreciation ExpenseAccumulated Depreciation - EquipmentRetained EarningsDebit15220030440Credit273969132054792

Approach to Solving the Question:Identify the Error and Correction Needed:Determine the initial…

Answered: In 2023, Carla Vista Corporation, which…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

At the beginning of 2021, Blossom Co. purchased an asset for $2300000 with an estimated useful life of 5 years and an estimated salvage value of $160000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Blossom Co.’s tax rate is 20% for 2021 and all future years.At the end of 2021, which of the following deferred tax accounts and balances is reported on Blossom’s balance sheet? Account Balance Deferred tax liability $85600 Deferred tax liability $98400 Deferred tax asset $98400 Deferred tax asset $85600
ou are working with an accounting firm. Sussie, who is representing Suss Co, needs advice about depreciating assets. She asks; what are depreciating assets? What are the different ways to calculate the declining value of depreciating assets? Furthermore, Suss Co has aggregated turnover of $ 2 billion. In December 2021, Suss Co purchased a machine for $4m, which was commenced immediately for an income-producing purpose. What tax does the Suss Co claim?
At the beginning of 2021, Pharoah Co. purchased an asset for $1400000 with an estimated useful life of 5 years and an estimated salvage value of $142000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pharoah Co's tax rate is 20% for 2021 and all future years. At the end of 2021, which of the following deferred tax accounts and balances is reported on Pharoah's balance sheet? Account Deferred tax liability Deferred tax liability Deferred tax asset Balance $61680 $50320 $61680
Hi there, Need help with attached question, thanks kindly!
A long-term asset was purchased at the beginning of 2021. It has a 2-year life and no salvage value. The company uses straight-line method for financial purpose and accelerated depreciation method for tax purpose. For tax purpose, 2021’s depreciation is $480 and 2022’s depreciation is $270. Please compute straight-line depreciation for financial purpose on your own. It should be ($480 + $270) and divided by 2. Assuming taxable income for 2021 is $477,000, the enacted tax rate is 20% for all years, this is the only difference between pretax financial income and taxable income, and there were no deferred taxes at the beginning of 2021. What amount of income tax expense should the company report at the end of 2021?
In 2025, the controller of Green Company discovered that 2024 depreciation expense was overstated by $40,000, a material amount. Assuming an income tax rate of 25%, the prior period adjustment to 2025 beginning retained would be:
s
Thor, Inc reported depreciation on the income statement by the straight-line method on an asset with a four-year useful life. MACRS is used for the tax return. Income statement: $5 million each year. Tax Return: 2020 $7 million; 2021 $6 million; 2022 $4 million; 2023 $3 million. The income tax rate is 20% for all years. The current year is 2022. Which of the following statements is true regarding the differences between accounting and tax depreciation? The 2022 beginning balance in the deferred tax liability is $.6M, the 2022 difference is originating, and the desired ending balance in the 2022 deferred tax liability is $.4M. The 2022 beginning balance in the deferred tax liability is $.6M, the 2022 difference is reversing, and the desired ending balance in the 2022 deferred tax liability is $.4M. The 2022 beginning balance in the deferred tax liability is $.4M, the 2022 difference is reversing, and the desired ending balance in the 2022 deferred tax liability is $.6M. The 2022…
Windsor Inc. reported income from continuing operations before taxes during 2020 of $816,500. Additional transactions occurring in 2020 but not considered in the $816,500 are as follows. 1. 2. 3. 4. 5. 6. The corporation experienced an uninsured flood loss in the amount of $90,600 during the year. At the beginning of 2018, the corporation purchased a machine for $61,200 (salvage value of $10,200) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2018, 2019, and 2020, but failed to deduct the salvage value in computing the depreciation base. Sale of securities held as a part of its portfolio resulted in a loss of $59,800 (pretax). When its president died, the corporation realized $136,400 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $48,930 (the gain is nontaxable). The corporation disposed of its recreational division at a loss of $113,710 before taxes. Assume that…
On January 1, 2018, Ameen Company purchased major pieces of manufacturing equipment for a total of $36 million. Ameen uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2020, the book value of the equipment was $30 million and its tax basis was $20 million. At December 31, 2021, the book value of the equipment was $28 million and its tax basis was $12 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2021 was $50 million. Required: 1. Prepare the appropriate journal entry to record Ameen's 2021 income taxes. Assume an income tax rate of 25%. 2. What is Ameen's 2021 net income?
On December 31, 2021, Winston Inc. has determined that it is more likely than not that $258000 of a $611000 deferred tax asset will not be realized. The journal entry to record this reduction in asset value will include a O debit to Income Tax Payable of $258000. O credit to the Allowance to Reduce Deferred Tax Asset to Expected Realizable Value of $258000. O credit to Income Tax Expense for $353000. Odebit to Income Tax Expense for $353000
On 1/1/2018, ABC company purchased equipment costing $35, 000 where its useful life was 5 years and the salvage value was 55,000. ABC decided to use the straight-line method in calculating depreciation. In 2020, ABC found out that the accountant recorded wrongly $600 and 5900 for 2018 and 2019 respectively, instead of S6, 000 for each year, for depreciation. Equipment is depreciated for tax purposes using a straight-line method, with a tax rate of 40% The accounting entries in 31/12/2020 for the corrections are: Select one: a. All answers are false b. Accumulated depreciation $10,500 Cumulative effect of corrections of prior period errors $6, 300 Deferred tax Liabilities S4, 200 c. Cumulative effect of corrections of prior period errors $8, 400 Deferred tax Assets $2, 100 Accumulated depreciation $10, 500 Retained earnings S8, 400 Cumulative effect of correction of prior period error S8, 400 d. Cumulative effect of corrections of prior period errors S6, 300 Deferred tax Assets S4, 200…

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS