Kelvin Apparel uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Four years after its purchase, one of Kelvin's warehouses has a carrying value of $520,000 and a tax basis of $410,000. There were no other temporary differences and no permanent differences. Taxable income was $5.5 million and Kelvin's tax rate is 35%. What is the deferred tax liability to be reported in the balance sheet?

Kelvin Apparel uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Four years after its purchase, one of Kelvin's warehouses has a carrying value of $520,000 and a tax basis of $410,000. There were no other temporary differences and no permanent differences. Taxable income was $5.5 million and Kelvin's tax rate is 35%. What is the deferred tax liability to be reported in the balance sheet?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter2: Financial Statements, Cash Flow,and Taxes

Section: Chapter Questions

Problem 19P: The Bookbinder Company had 500,000 cumulative operating losses prior to the beginning of last year....

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The Bookbinder Company had 500,000 cumulative operating losses prior to the beginning of last year. It had 100,000 in pre-tax earnings last year before using the past operating losses and has 300,000 in the current year before using any past operating losses. It projects 350,000 pre-tax earnings next year. a. How much taxable income was there last year? How much, if any, cumulative losses remained at the end of the last year? b. What is the taxable income in the current year? How much, if any, cumulative losses remain at the end of the current year? c. What is the projected taxable income for next year? How much, if any, cumulative losses are projected to remain at the end of next year?
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Kelvin Apparel uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Four years after its purchase, one of Kelvin's warehouses has a carrying value of $520,000 and a tax basis of $410,000. There were no other temporary differences and no permanent differences. Taxable income was $5.5 million and Kelvin's tax rate is 35%. What is the deferred tax liability to be reported in the balance sheet?
Kara Fashions uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Three years after its purchase, one of Kara’s buildings has a book value of $400,000 and a tax basis of $300,000. There were no other temporary differences and no permanent differences. Taxable income was $4 million and Kara’s tax rate is 25%. What is the deferred tax liability to be reported in the balance sheet? Assuming that the deferred tax liability balance was $20,000 the previous year, prepare the appropriate journal entry to record income taxes this year.
Kara Fashions uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Three years after its purchase, one of Kara’s buildings has a book value of $1,080,000 and a tax basis of $810,000. There were no other temporary differences and no permanent differences. Taxable income was $6 million and Kara’s tax rate is 25%. What is the deferred tax liability to be reported in the balance sheet? Assuming that the deferred tax liability balance was $37,000 the previous year, prepare the appropriate journal entry to record income taxes this year. 1. Deffered tax liability: 2. Journal Entry
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Milo Manufacturing uses straight-line depreciation for financial statement reporting and is able to deduct 100% of the cost of equipment in the year the equipment is purchased for tax purposes. Four years after its purchase, one of Milo’s manufacturing machines has a book value of $600,000. There were no other temporary differences and no permanent differences. Taxable income was $10 million and Milo’s tax rate is 25%. What is the deferred tax liability to be reported in the balance sheet? Assuming that the deferred tax liability balance was $175,000 the previous year, prepare the appropriate journal entry to record income taxes this year.
Saginaw Incorporated completed its first year of operations with a pretax loss of $500,000. The tax return showed a net operating loss of $600,000, which the company will carry forward. The $100,000 book–tax difference results from excess tax depreciation over book depreciation. Management has determined that it should record a valuation allowance equal to the net deferred tax asset. Assume the current tax expense is zero. Note: If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Required: Prepare the journal entry to record the deferred tax consequences for recognition of the current year NOL before considering the valuation allowance. Prepare the journal entry to record the deferred tax consequences of the depreciation book-tax difference. Prepare the journal entry to record the deferred tax consequences of the valuation allowance.
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