Problem 19-07 (Part Level Submission) Pharoah Corp. sold an investment on an installment basis. The total gain of $86,400 was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment-sales method for tax purposes. The installment period is 3 years; one-third of the sale price is collected in the period of sale. The tax rate was 40% in 2020, and 20% in 2021 and 2022. The 20% tax rate was not enacted in law until 2021. The accounting and tax data for the 3 years is shown below. Financial Accounting Tax Return 2020 (40% tax rate) Income before temporary difference $100,800 $100,800 Temporary difference 86,400 28,800 Income $187,200 $129,600 2021 (20% tax rate) Income before temporary difference $100,800 $100,800 Temporary difference 0 28,800 Income $100,800 $129,600 2022 (20% tax rate) Income before temporary difference $100,800 $100,800 Temporary difference 0 28,800 Income $100,800
Problem 19-07 (Part Level Submission) Pharoah Corp. sold an investment on an installment basis. The total gain of $86,400 was reported for financial reporting purposes in the period of sale. The company qualifies to use the installment-sales method for tax purposes. The installment period is 3 years; one-third of the sale price is collected in the period of sale. The tax rate was 40% in 2020, and 20% in 2021 and 2022. The 20% tax rate was not enacted in law until 2021. The accounting and tax data for the 3 years is shown below. Financial Accounting Tax Return 2020 (40% tax rate) Income before temporary difference $100,800 $100,800 Temporary difference 86,400 28,800 Income $187,200 $129,600 2021 (20% tax rate) Income before temporary difference $100,800 $100,800 Temporary difference 0 28,800 Income $100,800 $129,600 2022 (20% tax rate) Income before temporary difference $100,800 $100,800 Temporary difference 0 28,800 Income $100,800
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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 alt="2022 (20% tax rate).
Income before temporary difference
Temporary difference
$100,800
$100,800
28,800
$129,600
Income
$100,800
(a1)
Calculate cumulative temporary differences for years 2020-2022. (Negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
2020
2021
2022
Cumulative temporary difference
Calculate current tax expense for years 2020-2022.
Current tax
for 2020 $
Current tax
V for 202i $
Current tax
for 2022 $
Calculate deferred tax expense for 2020-2022.
Deferred tax
V for 2020 $
Deferred tax
v for 2021 $
Deferred tax
for 2022 $
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Transcribed Image Text:2022 (20% tax rate).
Income before temporary difference
Temporary difference
$100,800
$100,800
28,800
$129,600
Income
$100,800
(a1)
Calculate cumulative temporary differences for years 2020-2022. (Negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
2020
2021
2022
Cumulative temporary difference
Calculate current tax expense for years 2020-2022.
Current tax
for 2020 $
Current tax
V for 202i $
Current tax
for 2022 $
Calculate deferred tax expense for 2020-2022.
Deferred tax
V for 2020 $
Deferred tax
v for 2021 $
Deferred tax
for 2022 $
Click if you would like to Show Work for this question:
Open Show Work
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