Presented below are two independent situations related to future taxable and deductible amounts resulting from temporary differences existing at December 31, 2020. 1. Buffalo Co. has developed the following schedule of future taxable and deductible amounts. 2021 2022 2023 2024 2025 Taxable amounts $ 200 $ 200 $ 200 $ 200 $ 200 Deductible amount — — — ( 1,400 ) 2. Carla Co. has the following schedule of future taxable and deductible amounts. 2021 2022 2023 2024 Taxable amounts $ 200 $ 200 $ 200 $ 200 Deductible amount — — ( 2,200 ) — Both Buffalo Co. and Carla Co. have taxable income of $ 4,800 in 2020 and expect to have taxable income in all future years. The tax rates enacted as of the beginning of 2020 are 30% for 2020–2023 and 35% for years thereafter. All of the underlying temporary differences relate to noncurrent assets and liabilities. 1. Compute the net amount of deferred income taxes to be reported at the end of 2020, and indicate how it should be classified on the balance sheet for situation one. Deferred income taxes to be reported at the end of 2020 in Buffalo Co. 2. Compute the net amount of deferred income taxes to be reported at the end of 2020, and indicate how it should be classified on the balance sheet for situation two. Deferred income taxes to be reported at the end of 2020 in Carla co
Presented below are two independent situations related to future taxable and deductible amounts resulting from temporary differences existing at December 31, 2020.
1. Buffalo Co. has developed the following schedule of future taxable and deductible amounts.
|
2021
|
2022
|
2023
|
2024
|
2025
|
|||||||
| Taxable amounts | $ 200 | $ 200 | $ 200 | $ 200 | $ 200 | ||||||
| Deductible amount | — | — | — | ( 1,400 | ) |
2. Carla Co. has the following schedule of future taxable and deductible amounts.
|
2021
|
2022
|
2023
|
2024
|
||||||
| Taxable amounts | $ 200 | $ 200 | $ 200 | $ 200 | |||||
| Deductible amount | — | — | ( 2,200 | ) | — |
Both Buffalo Co. and Carla Co. have taxable income of $ 4,800 in 2020 and expect to have taxable income in all future years. The tax rates enacted as of the beginning of 2020 are 30% for 2020–2023 and 35% for years thereafter. All of the underlying temporary differences relate to noncurrent assets and liabilities.
1. Compute the net amount of
Deferred income taxes to be reported at the end of 2020 in Buffalo Co.
2. Compute the net amount of deferred income taxes to be reported at the end of 2020, and indicate how it should be classified on the balance sheet for situation two.
Deferred income taxes to be reported at the end of 2020 in Carla co.
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