Prepare a reconciliation of Lambda's taxable income before special deductions with its book income. (If an input field is not used in the table, leave the field empty; do not select a label or enter a zero. Abbreviation used: ded. = deduction.) Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Net income (loss) per books Federal income tax per books Excess of capital losses over capital gains Income subject to tax not recorded on books this year (itemize): 1 2 3 4 5 6 Expenses recorded on books this year not deducted on this retum (itemize) a Depreciation b Excess charitable contributions c Travel and entertainment Add lines 1 through 5 7 Income recorded on books this year not included on this return (itemize): Tax-exempt interest 8 Deductions on this return not charged against book income this year (itemize): a Depreciation b Charitable contributions 9 Add lines 7 and 8 10 Income (page 1, line 28)-line 6 less line 9 - X Tax Provision Process The following steps outline the approach to provide for income taxes in the financial statements. This process addresses only federal income taxes. 1. 2. 4. 5. 3. In the roll forward schedules, apply the appropriate statutory tax rates to determine the ending balances of deferred tax assets and liabilities. 6. Identify temporary differences by comparing the book and tax bases of assets and liabilities, and identify tax carryovers. 7. 8. Prepare "roll forward" schedules of temporary differences that tabulate cumulative differences and current-year changes. Adjust deferred tax assets by a valuation allowance if necessary. Adjust the income tax expense for uncertain tax positions if necessary. Determine current federal income taxes payable, which, in many cases. also is the current federal income tax expense for book purposes. Determining the total federal income tax expense (benefit). Prepare and record tax related journal entries. Prepare a tax provision reconciliation. Prepare the tax rate reconciliation. 9. 10. 11. Prepare financial statements. - X
Prepare a reconciliation of Lambda's taxable income before special deductions with its book income. (If an input field is not used in the table, leave the field empty; do not select a label or enter a zero. Abbreviation used: ded. = deduction.) Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Net income (loss) per books Federal income tax per books Excess of capital losses over capital gains Income subject to tax not recorded on books this year (itemize): 1 2 3 4 5 6 Expenses recorded on books this year not deducted on this retum (itemize) a Depreciation b Excess charitable contributions c Travel and entertainment Add lines 1 through 5 7 Income recorded on books this year not included on this return (itemize): Tax-exempt interest 8 Deductions on this return not charged against book income this year (itemize): a Depreciation b Charitable contributions 9 Add lines 7 and 8 10 Income (page 1, line 28)-line 6 less line 9 - X Tax Provision Process The following steps outline the approach to provide for income taxes in the financial statements. This process addresses only federal income taxes. 1. 2. 4. 5. 3. In the roll forward schedules, apply the appropriate statutory tax rates to determine the ending balances of deferred tax assets and liabilities. 6. Identify temporary differences by comparing the book and tax bases of assets and liabilities, and identify tax carryovers. 7. 8. Prepare "roll forward" schedules of temporary differences that tabulate cumulative differences and current-year changes. Adjust deferred tax assets by a valuation allowance if necessary. Adjust the income tax expense for uncertain tax positions if necessary. Determine current federal income taxes payable, which, in many cases. also is the current federal income tax expense for book purposes. Determining the total federal income tax expense (benefit). Prepare and record tax related journal entries. Prepare a tax provision reconciliation. Prepare the tax rate reconciliation. 9. 10. 11. Prepare financial statements. - X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Lambda Corporation reports the following results for the current year:
View the current year results. View the tax provision process.
Read the requirements.
Prepare a reconciliation of Lambda's taxable income before special deductions with its book income. (If an input field is not used in the table, leave the field empty; do not select a label or enter a zero. Abbreviation used: ded. = deduction.)
Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return
Net income (loss) per books
7 Income recorded on books this year
Federal income tax per books
not included on this return (itemize);
Tax-exempt interest
Excess of capital losses over capital gains
Income subject to tax not recorded on books
this year (itemize),
1
2
3
4
5
6
Expenses recorded on books this year
not deducted on this retum (itemize)
a Depreciation
b Excess charitable contributions
c Travel and entertainment
Add lines 1 through 5
Current Year Results
Net income per books (before federal income taxes)
Federal income tax expense per books
Net income per books (after federal income taxes)
Tax-exempt interest income
Interest on loan to purchase tax-exempt bonds
MACRS depreciation exceeding book depreciation
8 Deductions on this return not charged
against book income this year (itemize):
a Depreciation
b
Charitable contributions .........
9 Add lines 7 and 8.
10 Income (page 1, line 28)-Ine 6 less line 9
Net capital loss
Insurance premium on life of corporate officer where Lambda is the beneficiary
Excess charitable contributions carried over to next year
$ 733,000
(154,686)
$
578.314
12,500
7,500
46,000
5,500
8,600
4,800
Tax Provision Process
The following steps outline the approach to provide for income taxes in the
financial statements. This process addresses only federal income taxes.
1.
2.
3.
4.
5.
6.
Identify temporary differences by comparing the book and tax bases of
assets and liabilities, and identify tax carryovers.
Prepare 'roll forward" schedules of temporary differences that tabulate
cumulative differences and current-year changes.
In the roll forward schedules, apply the appropriate statutory tax rates to
determine the ending balances of deferred tax assets and liabilities.
Adjust deferred tax assets by a valuation allowance if necessary
Adjust the income tax expense for uncertain tax positions if necessary.
Determine current federal income taxes payable, which, in many cases,
also is the current federal income tax expense for book purposes.
Determining the total federal income tax expense (benefit).
7.
8.
9.
10.
11. Prepare financial statements.
Prepare and record tax related journal entries.
Prepare a tax provision reconciliation.
Prepare the tax rate reconciliation.
Print
Done
x
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