Oriole Company discovered an error in its accounting records in 2025. Oriole had purchased a copyright for $52,200 on January 1. The copyright has been amortized on a straight-line basis over its 20-year legal life. However, Oriole'saccountant neglected to obtain an estimate of the copyright's economic life, which was only fifteen years. Oriole Company used a calendar fiscal year and was subject to a 20% tax rate and follows ASPE. Prepare the journal entries to correct theaccounting error and to record copyright amortization for 2025. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for theamounts. List all debit entries before credit entries. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Retained Earnings Future income Tax Asset Accumulated Amortization - Patents (To record correction oferror) Amortization Expense Accumulated Amortization - Patents (To record amortization expense) Credit Oriole Company discovered an error in its accounting records in 2025. Oriole had purchased a copyright for $52,200 on January 1,2022. The copyright has been amortized on a straight-line basis over its 20-year legal life. However, Oriole's accountant neglected toobtain an estimate of the copyright's economic life, which was only fifteen years. Oriole Company used a calendar fiscal year and wassubject to a 20% tax rate and follows ASPE. Prepare the journal entries to correct the accounting error and to record copyrightamortization for 2025. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry isrequired, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. Round answers to Odecimal places, e.g. 5,275.)Account Titles and ExplanationRetained EarningsFuture Income Tax AssetAccumulated Amortization - Patents(To record correction of error)Amortization ExpenseAccumulated Amortization - Patents(To record amortization expense)DebitCredit

Journal entry:The monetary transaction of business is recorded in the books of accounts called the…

Oriole Company discovered an error in its accounting records in 2025. Oriole had purchased a copyright for $52,200 on January 1. 2022. The copyright has been amortized on a straight-line basis over its 20-year legal life. However, Oriole's accountant neglected to obtain an estimate of the copyright's economic life, which was only fifteen years. Oriole Company used a calendar fiscal year and was subject to a 20% tax rate and follows ASPE. Prepare the journal entries to correct the accounting error and to record copyright amortization for 2025. (Credit account titles are automatically indented 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 the amounts. List all debit entries before credit entries. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Retained Earnings Future Income Tax Asset Accumulated Amortization - Patents (To record correction of error) Amortization Expense Debit Credit

Oriole Company discovered an error in its accounting records in 2025. Oriole had purchased a copyright for $52,200 on January 1. 2022. The copyright has been amortized on a straight-line basis over its 20-year legal life. However, Oriole's accountant neglected to obtain an estimate of the copyright's economic life, which was only fifteen years. Oriole Company used a calendar fiscal year and was subject to a 20% tax rate and follows ASPE. Prepare the journal entries to correct the accounting error and to record copyright amortization for 2025. (Credit account titles are automatically indented 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 the amounts. List all debit entries before credit entries. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Retained Earnings Future Income Tax Asset Accumulated Amortization - Patents (To record correction of error) Amortization Expense Debit Credit

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

Bridgeport Corp. purchased depreciable assets costing $36,600 on January 2, 2023. For tax purposes, the company uses CCA in a class that has a 30% rate. For financial reporting purposes, the company uses straight-line depreciation over five years. The enacted tax rate is 25% for all years. This depreciation difference is the only reversing difference the company has. Calculate the amount of capital cost allowance and depreciation expense from 2023 to 2027, as well as the corresponding balances for the carrying amount and undepreciated capital cost of the depreciable assets at the end of each of the years 2023 to 2027. Assume that these assets are considered “eligible equipment” for purposes of the Accelerated Investment Incentive (under the AII, instead
Bonita Company owes $167,000 plus $14,900 of accrued interest to Windsor State Bank. The debt is a 10-year, 10% note. During 2020, Bonita's business deteriorated due to a faltering regional economy. On December 31, 2020, Windsor State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $322,000, accumulated depreciation of $177,100, and a fair value of $149,000. (a) Prepare journal entries for Bonita Company and Windsor State Bank to record this debt settlement. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date December 31, 2020 Account Titles and Explanation Bonita Company (Debtor): Notes Payable Interest Payable Debit 167,000 14,900 Credit
Ayres Services acquired an asset for $96 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2021. The enacted tax rate is 25% Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income 2021 $380 24 (96) Cumulative Temporary Difference Deferred Tax Liability $308 ($ in millions) 2023 2024 2022 $400 24 (0) (0) $415 $450 24 24 (0) $424 $439 $474 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should…
Fore Farms reported a pretax operating loss of $204 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $4 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $10 million from accruing a loss contingency. The loss will be tax deductible when paid in 2025. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above. Taxable income in Fores’s two previous years of operation was as follows: 2022 $ 92 million 2023 $ 68 million Required: Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2024. Assume Fore will carry back its NOL to prior years. What is the net operating loss reported in 2024 income statement? Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $232 million. No…
Dog
Pearl Inc. incurred a net operating loss of $455,000 in 2020. The tax rate for all years is 20%. Assume that it is more likely than not that the entire net operating loss carryforward will not be realized in future years. Prepare all the journal entries necessary at the end of 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Purple Ltd purchased a depreciable asset for $900,000 on 1 July 2014. For accounting purposes, it is estimated to have a useful life of 8 years with no residual value. For taxation purposes, the useful life is 6 years with no residual value. The asset is depreciated on a straight-line basis for both accounting and tax purposes. Tax rate is 30%. What is the adjustment required in the deferred tax liability account for the year ended 30 June 2020 and 30 June 2021 respectively in accordance with the requirements of AASB112 Income Taxes? $11,250; $11,250 $11,250; $33,750 $11,250; ($33,750) $11,250; ($11,250)
Whispering Company owes $190,000 plus $16,600 of accrued interest to Metlock State Bank. The debt is a 10-year, 10% note. During 2025, Whispering's business deteriorated due to a faltering regional economy. On December 31, 2025, Metlock State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $344,000, accumulated depreciation of $189,200, and a fair value of $166,000. (a) Prepare journal entries for Whispering Company and Metlock State Bank to record this debt settlement. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is ent ed. Do not indent manually. List all debit entries before credit entries.) No. Date Account Titles and Explanation Whispering Company (Debtor): Debit Credit
Corning Industries owns a patent for which it paid $77,000. At the end of the current year, accumulated amortization on the patent totaled $14,000. Due to adverse economic conditions, Corning’s management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $45,000, and the patent's fair value is $30,000. (a) What is the amount of the impairment loss, if any, on the patent at the end of the current year? (b) What is the book value of the patent after any impairment loss is recorded?
In 2021, Heartfin Farms reported a pretax accounting loss of $196 million. During the year, the company paid a fee of $4 million due to a fine from the Food and Drug Administration. The company accrued an expense for estimated paid future absences of $30 million relating to the company’s employee vacation program. The amounts owed will be paid equally over the next two years ($15 million in 2022 and $15 million in 2023). The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2021 other than those described above. In the prior two years, Hinton Farms reported taxable income of $64 million in 2020 and $88 million in 2019. What is Heartfin Farms' net operating loss carryforward in 2021? A. $10 million B. $162 million C. $30 million D. $152 million
Fore Farms reported a pretax operating loss of $150 million for financial reporting purposes in 2021. Contributing to the loss were (a) a penalty of $10 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2021 and (b) an estimated loss of $20 million from accruing a loss contingency. The loss will be tax deductible when paid in 2022. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2021 other than those described above. Required:1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2021.2. What is the net operating loss reported in 2021 income statement?3. Prepare the journal entry to record income taxes in 2022 assuming pretax accounting income is $155 million. No additional temporary differences originate in 2022.