**Deferred Tax Liability Calculation Example****Scenario:**Larkspur Corporation began operations in 2020 and reported pretax financial income of $206,000 for the year. Larkspur's tax depreciation exceeded its book depreciation by $33,000. Larkspur's tax rate for 2020 and subsequent years is 30%. In its December 31, 2020, balance sheet, what amount of deferred tax liability should be reported?**Calculation:**To find the deferred tax liability, follow these steps:1. Determine the difference between tax depreciation and book depreciation.2. Multiply this difference by the tax rate.**Formula:**\[ \text{Deferred Tax Liability} = \text{Difference in Depreciation} \times \text{Tax Rate} \]Given:- Difference in depreciation = $33,000- Tax rate = 30%**Calculation:**\[ \text{Deferred Tax Liability} = 33,000 \times 0.30 \]\[ \text{Deferred Tax Liability} = 9,900 \]Thus, the amount of deferred tax liability to be reported is $9,900.**Deferred Tax Liability to be reported:**\[ \boxed{\$9,900} \]This represents the tax that the company will defer to future periods due to the difference in depreciation methods for tax and book purposes.

Depreciation expense is a kind of operating expense that is reported at the end of the periodic…

Larkspur Corporation began operations in 2020 and reported pretax financial income of $206,000 for the year. Larkspur's tax depreciation exceeded its book depreciation by $33,000. Larkspur's tax rate for 2020 and years thereafter is 30%. In its December 31, 2020, balance sheet, what amount of deferred tax liability should be reported? Deferred tax liability to be reported $

Larkspur Corporation began operations in 2020 and reported pretax financial income of $206,000 for the year. Larkspur's tax depreciation exceeded its book depreciation by $33,000. Larkspur's tax rate for 2020 and years thereafter is 30%. In its December 31, 2020, balance sheet, what amount of deferred tax liability should be reported? Deferred tax liability to be reported $

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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In 2025 Vaughn Corporation had pretax financial income of $185,000 and taxable income of $117,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 30%. Compute the amount to be reported as income taxes payable at December 31, 2025
Regine Company computed a pre-tax financial income of P6,000,000 for the year ended December 31, 2020. The following differences are noted between taxable and accounting income:· Nontaxable revenue: P600,000· Nondeductible expense: P200,000· Warranty provision accrued and expensed in 2020 but tax-deductible when paid: P300,000· Excess tax depreciation over accounting depreciation: P250,000· Excess of accounting revenue over tax revenue (timing difference): P200,000Current tax rate for 2020 is 32% while tax rate for 2021 and forward is 30%. How much is the total tax expense? a. 1,744,000 b. 1,699,000 c. 1,789,000 d. 1,792,000
Coronado Corporation, a private company, began operations on January 1, 2020. During its first three years of operations. Coronado reported net income and declared dividends as follows: 2020 2021 2022 Net income $50,000 130,000 151,000 Dividends declared Effective tax rate $0 50,000 The following information is for 2023: 50,000 Income before income tax Correction of prior period error: understatement of 2021 depreciation expense (before tax) Cumulative increase in prior years' income from change in inventory method (before tax) Dividends declared (of this amount, $25,000 will be paid on January 15, 2024) $320,000 Coronado Corporation Statement of Retained Earnings 35,000 45,000 100.000 40% Prepare a 2023 statement of retained earnings for Coronado. The company follows ASPE. (List items that increase retained earnings first after adjusted balance. Enter negative amounts using either o negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Asnwer in 30 minutes Sherrod, Inc., reported pretax accounting income of $76 million for 2021. The following information relates to differences between pretax accounting income and taxable income: Income from installment sales of properties included in pretax accounting income in 2021 exceeded that reported for tax purposes by $3 million. The installment receivable account at year-end 2021 had a balance of $7 million (representing portions of 2020 and 2021 installment sales), expected to be collected equally in 2022 and 2023. Sherrod was assessed a penalty of $2 million by the Environmental Protection Agency for violation of a federal law in 2021. The fine is to be paid in equal amounts in 2021 and 2022. Sherrod rents its operating facilities but owns one asset acquired in 2020 at a cost of $80 million. Depreciation is reported by the straight-line method, assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the…
Mallock Incorporated reports net operating income (loss) for financial reporting and tax purposes in each year as follows ($ in thousands): D Mallock's federal tax rate decreased from 35% to 21% starting in 2018. Mallock accounts for its 2020 NOL under the CARES Act. Required: 1. Prepare the appropriate journal entry to record Mallock's 2020 income taxes. 2. Show the lower portion of the 2020 income statement that reports income tax expense or benefit. 2016 $ 160 2017 $ 50 2018 $ 0 2019 $ 0 2020 $ (240)
At December 31, 2020, Novak Company had a net deferred tax liability of $445,000. An explanation of the items that compose this balance is as follows. Temporary Differences in Deferred Taxes Resulting Balances 1. Excess of tax depreciation over book depreciation. $ 188,000 2. Accrual, for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2021. The loss will be deducted on the tax return when paid. $ (55,000 ) 3. Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment. $ 312,000 In analyzing the temporary differences, you find that $32,000 of the depreciation temporary difference will reverse in 2021, and $122,000 of the temporary difference due to the installment sale will reverse in 2021. The tax rate for all years is 40%. Indicate the manner in which deferred taxes should be presented on Novak Company's December 31, 2020, statement of financial position.
Baltimore inc reported pretax gaap income of $45,000 in 2020. The company determined it had deducted $5000 in nondeductible fines and added $2800 in tax exempt municipal interest revenue to Gaap income. Given a statutory tax rate of 25%, determine the taxable income, income tax payable, income tax expense, net income, and effective tax rate.
Martinez Corporation reports pretax financial income of $264,100 for 2020. The following items cause taxable income to be different than pretax financial income. 1. Rental income on the income statement is less than rent collected on the tax return by $65,200. Depreciation on the tax return is greater than depreciation on the income statement by $41,800. Interest on an investment in a municipal bond of $7,000 on the income statement. 3. Martinez' tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2020. (a) Compute taxable income and income taxes payable for 2020. Taxable income $enter a dollar amount Income taxes payable $enter a dollar amount 2.
Four Square Services Corporation estimates that its 2021 taxable income will be $1,000,000. Thus, it incurs a $210,000 liability. For the following independent cases, compute Four Square's minimum quarterly estimated tax payments that will avoid an underpayment penalty. a. For 2020, taxable income was $800,000, and tax liability was $168,000. b. For 2019, taxable income was $2 million, and tax liability was $680,000. For 2020, taxable income was $100,000, and tax liability was $21,000.
For calendar 2020, Marvel Corporation, Inc., reported depreciation expense of $900,000 on its income statement, but on its 2020 income tax return, Marvel claimed CCA of $1,200,000. The 2020 balance sheet also included $150,000 in accrued warranty liability that will be deducted for tax purposes when paid. Marvel's income tax rates (known at December 31, 2020) are 30% for 2020 and 2021, and 24% for 2022 and 2023. The depreciation difference and warranty liability will reverse over the next three years as follows: Depreciation Difference Warranty Costs 2021 $ 60,000 $ 70,000 2022 140,000 50,000 2023 100,000 30,000 $ 300,000 $150,000 These were Marvel's only reversible (timing) differences. At December 31, 2020, Marvel’s deferred tax liability should be Select one: a. $67,800. b. $35,400. c. $75,000. d. $133,800. e. None of the above AMOUNTS.
ABC Corporation provides you with the following information for the 2020 tax year, which was the company’s first year of operation:Book Income Before Taxes $100,000,000Book Depreciation $ 5,000,000MACRS Depreciation $ 7,500,000Foreign Sourced Income $ 40,000,000Assume a federal tax rate of 21%, disregard state taxes.a. Calculate federal taxable income.b. Calculate the federal tax payable and federal tax expense.c. Given your answer above in b., is a deferred tax asset or a deferred tax liability created? Provide the journal entry needed to reflect this.
Integrity Company reported pre-tax financial income of P400,000 for 2022. In the computation of income taxes, the following data were gathered: Non-taxable gain - P175,000 Depreciation deducted for tax purposes in excess of depreciation deducted for book purposes - P25,000 Tax payment made during 2022 - P27,500 Enacted tax rate - 35% What amount shall be reported as current tax liability?

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