Reconciling between Effective and Statutory Tax Rates Baltimore Inc. reported pretax GAAP income of $72,000 in 2020. In analyzing differences between GAAP income and taxable income, the company determined that it had deducted $9,000 in nondeductible fines and added $5,040 in tax-exempt municipal interest revenue to GAAP income. The statutory tax rate is 25%. Prepare a reconciliation between Baltimore Inc.'s effective and statutory tax rates. • Note: Round percentage to one decimal place (for example, enter 3.4 for 3.35%). Percentage Statutory tax rate 0 % Tax-exempt income 0% Non-deductible expense 0 % Effective tax rate 0 %

Reconciling between Effective and Statutory Tax Rates Baltimore Inc. reported pretax GAAP income of $72,000 in 2020. In analyzing differences between GAAP income and taxable income, the company determined that it had deducted $9,000 in nondeductible fines and added $5,040 in tax-exempt municipal interest revenue to GAAP income. The statutory tax rate is 25%. Prepare a reconciliation between Baltimore Inc.'s effective and statutory tax rates. • Note: Round percentage to one decimal place (for example, enter 3.4 for 3.35%). Percentage Statutory tax rate 0 % Tax-exempt income 0% Non-deductible expense 0 % Effective tax rate 0 %

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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In 2022 Charmed, Inc. recorded book income of $420,000. The company's only temporary difference relates to a $66,000 installment sale that it recorded for book purposes; there are no permanent differences. Charmed anticipates receiving payments equally over the following three years. The current enacted tax rate in 2022 is 39%. The substantively enacted tax rates for the following three years are 34%, 39%, and 47%, respectively.Under IFRS, what deferred tax amount should Charmed record for this temporary difference? Group of answer choices $31,020 $26,400 $24,640 $25,740
For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 290,000 Permanent difference (15,000 ) 275,000 Temporary difference-depreciation (20,100 ) Taxable income $ 254,900 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as its deferred income tax liability as of the end of its first year of operations? $20,100. $35,100. $5,025. $8,775.
Nirvana Corporation reports pretax financial income of $260,000 for 2022. The following items cause taxable income to be different than pretax financial income. Rental income on the 2022 tax return is $65,000 greater than on the income statement. Depreciation expense on the tax return is greater than depreciation on the income statement by $40,000. Interest on an investment in a municipal bond of $6,500 is reported on the income statement. Nirvana's tax rate is 25% for all years. There are no deferred taxes at the beginning of 2022. The company expects to realize only 40% of the benefit of any deferred tax assets. The fiscal year ends December 31, 2022. Required: 1. Prepare the journal entries to record i) income tax expense, income taxes payable, and deferred income taxes for 2022, and ii) any valuation allowance needed. 2. Indicate clearly what would be reported on the income statement beginning with income before income taxes for the year ended December 31, 2022 from just…
For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $220,000 Permanent difference (14,200) 205,800 Temporary difference - depreciation (21,000) Taxable income $ 184,800 Tringali's tax rate is 25 %. Assume that no estimated taxes have been paid. What should Tringali report as its income tax expense for its first year of operations?
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For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 300,000 Permanent difference (15,000 ) 285,000 Temporary difference-depreciation (20,000 ) Taxable income $ 265,000 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as income tax payable for its first year of operations?
Unity’s effective income tax rate for 2002 is 32%. The depreciation difference will reverse in equal amounts over the next three years at an enacted tax rate of 32%. In Unity’s 2002 income statement, what amount should be reported as the current portion of its provision for income taxes?
At the beginning of 2025, Pronghorn Construction Company changed from the cost-recovery method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the cost- recovery method for tax purposes. For years prior to 2025, pretax income under the two methods was as follows: percentage-of-completion $114,200, and cost-recovery $78,200. The tax rate is 40%. Pronghorn has a profit-sharing plan, which pays all employees a bonus at year-end based on 2% of pretax income. Compute the indirect effect of Pronghorn's change in accounting principle that will be reported in the 2025 income statement, assuming that the profit-sharing contract explicitly requires adjustment for changes in income numbers. Indirect effect
B Co. reported a deferred tax liability of $26.0 million for the year ended December 31, 2017, related to a temporary difference of $65 million. The tax rate was 40%. The temporary difference is expected to reverse in 2019 at which time the deferred tax liability will become payable. There are no other temporary differences in 2017–2019. Assume a new tax law is enacted in 2018 that causes the tax rate to change from 40% to 30% beginning in 2019. (The rate remains 40% for 2018 taxes.) Taxable income in 2018 is $95 million. Required:Determine the effect of the change and prepare the appropriate journal entry to record B’s income tax expense in 2018.
For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 300,000 Permanent difference (15,000 ) 285,000 Temporary difference-depreciation (20,000 ) Taxable income $ 265,000 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as its deferred income tax liability as of the end of its first year of operations?
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