Pronghorn Inc. incurred a net operating loss of $583,900 in 2023. Combined income for 2020, 2021, and 2022 was $464,400. The tax rate for all years is 30%. Assume that it is more likely than not that the entire tax loss carryforward will not be realized in future years. Assume that Pronghorn earns taxable income of $20,300 in 2024 and that at the end of 2024 there is still too much uncertainty to recognize a deferred tax asset. (a) Prepare the journal entries that are necessary at the end of 2024 assuming that Pronghorn does not use a valuation allowance account. (List all debit entries before credit entries. 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.) Year Account Titles and Explanation Debit Credit

Pronghorn Inc. incurred a net operating loss of $583,900 in 2023. Combined income for 2020, 2021, and 2022 was $464,400. The tax rate for all years is 30%. Assume that it is more likely than not that the entire tax loss carryforward will not be realized in future years. Assume that Pronghorn earns taxable income of $20,300 in 2024 and that at the end of 2024 there is still too much uncertainty to recognize a deferred tax asset. (a) Prepare the journal entries that are necessary at the end of 2024 assuming that Pronghorn does not use a valuation allowance account. (List all debit entries before credit entries. 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.) Year Account Titles and Explanation Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sandhill Corp. follows IFRS and began operations in 2023 and reported accounting income of $273,000 for the year. Sandhill's CCA exceeded its book depreciation by $39,200. Sandhill's tax rate for 2023 and years thereafter is 30%. Assume that the $39,200 difference is the only difference between Sandhill's accounting income and taxable income. Prepare the journal entries to record the current tax expense, deferred tax expense, income tax payable, and the deferred tax liability. (List all debit entries before credit entries. 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.) Date December 31, 2023 December 31, 2023 Account Titles and Explanation (To record current tax expense) (To record deferred tax expense) II Debit Credit
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Kucing Garong Construction Company decided at the beginning of 2020 to change from the cost recovery method to the percentage-of-completion method for financial reporting purposes. The company will continue to use the cost-recovery method for tax purposes. For years prior to 2020, pretax income under the two methods was as follows: percentage-of-completion £144,000, and cost-recovery £114,000. The tax rate is 35%. Kucing Garong has a profit-sharing plan, which pays all employees a bonus at year-end based on 1.5% of pretax income. What is the amount of the indirect effect of Kucing Garong’s change in accounting policy that will be reported in the 2020 income statement, assuming that the profit-sharing contract explicitly requires adjustment for changes in income numbers?
At December 31, 2020, Novak Company had a net deferred tax liability of $445,000. An explanation of the items that compose this balance is as follows. Temporary Differences in Deferred Taxes Resulting Balances 1. Excess of tax depreciation over book depreciation. $ 188,000 2. Accrual, for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2021. The loss will be deducted on the tax return when paid. $ (55,000 ) 3. Accrual method used for book purposes and installment method used for tax purposes for an isolated installment sale of an investment. $ 312,000 In analyzing the temporary differences, you find that $32,000 of the depreciation temporary difference will reverse in 2021, and $122,000 of the temporary difference due to the installment sale will reverse in 2021. The tax rate for all years is 40%. Indicate the manner in which deferred taxes should be presented on Novak Company's December 31, 2020, statement of financial position.
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Violet Corporation reported a loss in 2022 of $610,000 and carried back the loss to the extent allowed. The company reported taxable income of $215,000 in 2020 and $245,000 in 2021. It has no permanent or temporary differences and its tax rate is 30%.Violet reported taxable income of $345,000 in 2023. What is the necessary journal entry for 2023? Group of answer choices Income Tax Expense 183,000 Income Tax Payable 138,000 Deferred Tax Asset 45,000 Income Tax Expense 103,500 Income Tax Payable 58,500 Deferred Tax Asset 45,000 Income Tax Refund Receivable 138,000 Deferred Tax Asset 45,000 Income Tax Benefit 183,000 Income Tax Refund Receivable 58,500 Deferred Tax Asset 45,000 Income Tax Benefit 103,500
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