Northwestern Export Services purchased some computers for $80,000 in Year 1. The equipment is depreciated for financial reporting purposes over 5 years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 20%. Amounts for pretax GAAP accounting income, depreciation, and taxable income in Year 1, Year 2, Year 3, Year 4, and Year 5 are as follows:$ in thousandsYear 1Year 2Year 3Year 4Year 5Pretax accounting income$240$195$210$285$320Depreciation on income statement1616161616Depreciation on tax return(27)(35)(12)(6)0Taxable income$229$176$214$295$336 a) What type of book-tax difference is this?b) Prepare the appropriate journal entry related to the tax deferral ONLY at December 31, Year 1. (Note: The purchase of computers has already been recorded in Year 1.)Note: Round answers ($ in thousands) to the nearest whole number, if applicable.($ in thousands) AccountDebitCreditDec 31, Year 1 Answer Answer Answer To record income tax expense for Dec 31, Year 1. c) Determine the deferred amount at the end of Year 1 on the balance sheet.Note: Round answer ($ in thousands) to the nearest whole number, if applicable.$Answerd) Prepare the appropriate journal related to the deferral entry at December 31, Year 2.Note: Round answers ($ in thousands) to the nearest whole number, if applicable.($ in thousands) AccountDebitCreditDec 31, Year 2 Answer Answer Answer To record income tax expense for Dec 31, Year 2. e) Determine the deferred amount at the end of Year 2 on the balance sheet.Note: Round answer ($ in thousands) to the nearest whole number, if applicable. c) Determine the deferred amount at the end of Year 1 on the balance sheet.Note: Round answer ($ in thousands) to the nearest whole number, if applicable.$ 0d) Prepare the appropriate journal related to the deferral entry at December 31, Year 2.Note: Round answers ($ in thousands) to the nearest whole number, if applicable.($ in thousands)Dec 31, Year 2AccountDebitCredit0000く00To record income tax expense for Dec 31, Year 2.e) Determine the deferred amount at the end of Year 2 on the balance sheet.Note: Round answer ($ in thousands) to the nearest whole number, if applicable.$ 0Please answer all parts of the question. Northwestern Export Services purchased some computers for $80,000 in Year 1. The equipment is depreciated for financial reporting purposes over 5 years ona straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 20%. Amounts for pretax GAAPaccounting income, depreciation, and taxable income in Year 1, Year 2, Year 3, Year 4, and Year 5 are as follows:$ in thousandsPretax accounting income$240 $195 $210 $285 $320Year 1 Year 2 Year 3 Year 4 Year 5Depreciation on income statement161616Depreciation on tax returnTaxable income(27) (35) (12)$229 $176 $21416(6)160$295$336a) What type of book-tax difference is this?b) Prepare the appropriate journal entry related to the tax deferral ONLY at December 31, Year 1. (Note: The purchase of computers has already been recordedin Year 1.)Note: Round answers ($ in thousands) to the nearest whole number, if applicable.($ in thousands)Dec 31, Year 1AccountDebitCreditooo000ooo000To record income tax expense for Dec 31, Year 1.

Let's examine the journal post in greater depth. The journal entry, which relates to the tax…

c) Determine the deferred amount at the end of Year 1 on the balance sheet. Note: Round answer ($ in thousands) to the nearest whole number, if applicable. $ 0 d) Prepare the appropriate journal related to the deferral entry at December 31, Year 2. Note: Round answers ($ in thousands) to the nearest whole number, if applicable. ($ in thousands) Dec 31, Year 2 Account Debit Credit 0 0 0 0 く 0 0 To record income tax expense for Dec 31, Year 2. e) Determine the deferred amount at the end of Year 2 on the balance sheet. Note: Round answer ($ in thousands) to the nearest whole number, if applicable. $ 0 Please answer all parts of the question. Northwestern Export Services purchased some computers for $80,000 in Year 1. The equipment is depreciated for financial reporting purposes over 5 years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 20%. Amounts for pretax GAAP accounting income, depreciation, and taxable income in Year 1, Year 2, Year 3, Year 4, and Year 5 are as follows: $ in thousands Pretax accounting income $240 $195 $210 $285 $320 Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation on income statement 16 16 16 Depreciation on tax return Taxable income (27) (35) (12) $229 $176 $214 16 (6) 16 0 $295 $336 a) What type of book-tax difference is this? b) Prepare the appropriate journal entry related to the tax deferral ONLY at December 31, Year 1. (Note: The purchase of computers has already been recorded in Year 1.) Note: Round answers ($ in thousands) to the nearest whole number, if applicable. ($ in thousands) Dec 31, Year 1 Account Debit Credit ooo 0 0 0 ooo 0 0 0 To record income tax expense for Dec 31, Year 1.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 5MC: At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial...

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Question

Northwestern Export Services purchased some computers for $80,000 in Year 1. The equipment is depreciated for financial reporting purposes over 5 years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 20%. Amounts for pretax GAAP accounting income, depreciation, and taxable income in Year 1, Year 2, Year 3, Year 4, and Year 5 are as follows:

$ in thousands	Year 1	Year 2	Year 3	Year 4	Year 5
Pretax accounting income	$240	$195	$210	$285	$320
Depreciation on income statement	16	16	16	16	16
Depreciation on tax return	(27)	(35)	(12)	(6)	0
Taxable income	$229	$176	$214	$295	$336

a) What type of book-tax difference is this?

b) Prepare the appropriate journal entry related to the tax deferral ONLY at December 31, Year 1. (Note: The purchase of computers has already been recorded in Year 1.)
Note: Round answers ($ in thousands) to the nearest whole number, if applicable.

($ in thousands)

	Account	Credit
Dec 31, Year 1		Answer
		Answer
		Answer
	To record income tax expense for Dec 31, Year 1.

c) Determine the deferred amount at the end of Year 1 on the balance sheet.
Note: Round answer ($ in thousands) to the nearest whole number, if applicable.
$Answer

d) Prepare the appropriate journal related to the deferral entry at December 31, Year 2.
Note: Round answers ($ in thousands) to the nearest whole number, if applicable.

($ in thousands)

	Account	Credit
Dec 31, Year 2		Answer
		Answer
		Answer
	To record income tax expense for Dec 31, Year 2.

e) Determine the deferred amount at the end of Year 2 on the balance sheet.
Note: Round answer ($ in thousands) to the nearest whole number, if applicable.

c) Determine the deferred amount at the end of Year 1 on the balance sheet.
Note: Round answer ($ in thousands) to the nearest whole number, if applicable.
$ 0
d) Prepare the appropriate journal related to the deferral entry at December 31, Year 2.
Note: Round answers ($ in thousands) to the nearest whole number, if applicable.
($ in thousands)
Dec 31, Year 2
Account
Debit
Credit
0
0
0
0
く
0
0
To record income tax expense for Dec 31, Year 2.
e) Determine the deferred amount at the end of Year 2 on the balance sheet.
Note: Round answer ($ in thousands) to the nearest whole number, if applicable.
$ 0
Please answer all parts of the question.

Northwestern Export Services purchased some computers for $80,000 in Year 1. The equipment is depreciated for financial reporting purposes over 5 years on
a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 20%. Amounts for pretax GAAP
accounting income, depreciation, and taxable income in Year 1, Year 2, Year 3, Year 4, and Year 5 are as follows:
$ in thousands
Pretax accounting income
$240 $195 $210 $285 $320
Year 1 Year 2 Year 3 Year 4 Year 5
Depreciation on income statement
16
16
16
Depreciation on tax return
Taxable income
(27) (35) (12)
$229 $176 $214
16
(6)
16
0
$295
$336
a) What type of book-tax difference is this?
b) Prepare the appropriate journal entry related to the tax deferral ONLY at December 31, Year 1. (Note: The purchase of computers has already been recorded
in Year 1.)
Note: Round answers ($ in thousands) to the nearest whole number, if applicable.
($ in thousands)
Dec 31, Year 1
Account
Debit
Credit
ooo
0
0
0
ooo
0
0
0
To record income tax expense for Dec 31, Year 1.

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