Need solutions asap Southern Atlantic Distributors began operations in January 2011 andpurchased a delivery truck for $48,000. Southern Atlantic plans to usestraight-line depreciation over a four-year expected useful life forfinancial reporting purposes. For tax purposes, the deduction is 50% ofcost in 2011, 30% in 2012, and 20% in 2013. Pretax accounting income for2011 was $274,000, which includes interest revenue of $37,000 frommunicipal bonds. The enacted tax rate is 40%.Assuming no differences between accounting income and taxableincome other than those described above; prepare the journal entry torecord income taxes in 2011. (Round your answers to the nearest dollaramount. Enter your answers in thousands. Omit the "$" sign in yourresponse.)

Step 1: Identify Temporary and Permanent DifferencesTemporary Difference: DepreciationAccounting…

Answered: Southern Atlantic Distributors began…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $40,000.Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2018, 30% in 2019, and 20% in 2020. Pretaxaccounting income for 2018 was $300,000, which includes interest revenue of $40,000 from municipal bonds.The enacted tax rate is 40%.Required:Assuming no differences between accounting income and taxable income other than those described above:1. Prepare the journal entry to record income taxes in 2018.2. What is Southern Atlantic’s 2018 net income?
Southern Atlantic Distributors began operations in January 2021 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $240,000, which includes interest revenue of $36,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table given below and prepare the journal entry to record income taxes in 2021. 2. What is Southern Atlantic's 2021 net income? Complete this question by entering your answers in the tabs below. Required Required Required 1 GJ 1 2 Complete the following table given below to record income taxes in 2021. (Amounts to be deducted should be indicated with a minus sign. Enter your…
Southern Atlantic Distributors began operations in January 2021 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2021, 30% in 2022, and 20% in 2023. Pretax accounting income for 2021 was $520,000, which includes interest revenue of $60,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table given below and prepare the journal entry to record income taxes in 2021. 2. What is Southern Atlantic's 2021 net income? Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 GJ Required 2 Complete the following table given below to record income taxes in 2021. (Amounts to be deducted should be indicated with a minus sign.…
ces Southern Atlantic Distributors began operations in January 2024 and purchased a delivery truck for $40,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2024, 30% in 2025, and 20% in 2026. Pretax accounting income for 2024 was $500,000, which includes interest revenue of $52,000 from municipal governmental bonds. The enacted tax rate is 25%. Assuming no differences between accounting income and taxable income other than those described above: Required: 1. Complete the following table and prepare the journal entry to record income taxes in 2024. 2. What is Southern Atlantic's 2024 net income? Complete this question by entering your answers in the tabs below. Required 1 Calculation General Journal Required 2 Complete the following table to record income taxes in 2024. Note: Amounts to be deducted should be indicated with a minus sign. Enter your…
At the beginning of 2015, Pitman Co. purchased as asset for $1,200,000 with an estimated useful life of 5 years and an estimated salvage value of $200,000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pitman Co.'s tax rate is 40% for 2015 and all future years. At the end of 2015, what are the book basis and the tax basis of the asset? Book basis Tax basis a. 1,000,000 620,000 b. 980,000 620,000 c. 980,000 720,000 d. 1,000,000 720,000 At the end of 2015. which of the following deferred tax accounts and balances is reported on Pitman's balance sheet? Account Balance a. Deferred tax asset 136,000 b. Deferred tax liability 136,000 c. Deferred tax asset 112,000 d. Deferred tax liability 112,000
Early in January 2021, DeVille Company purchased machinery costing $700,000. For financial reporting purposes, DeVille Company has a December 31st year end and uses straight-line depreciation. DeVille estimates the useful life of this machinery to be four years with no residual value. For tax purposes, the deduction is 40%, 30%, 20%, and 10% over the life of the machinery. Pretax accounting income for 2021 was $800,000, which includes interest revenue of $21,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record the 2021 provision for income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
At the beginning of 2018, Pitman Co. purchased an asset for $1,800,000 with an estimated useful life of 5 years and an estimated salvage value of $150,000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used (2X Asset Cost ÷ Useful Life). Pitman Co.’s tax rate is 40% for 2018 and all future years. At the end of 2018, what are the book basis and the tax basis of the asset? Book basis Tax basis` a. $1,320,000 $930,000 b. $1,470,000 $930,000 c. $1,470,000 $1,080,000 d. $1,320,000 $1,080,000
Thor, Inc reported depreciation on the income statement by the straight-line method on an asset with a four-year useful life. MACRS is used for the tax return. Income statement: $5 million each year. Tax Return: 2020 $7 million; 2021 $6 million; 2022 $4 million; 2023 $3 million. The income tax rate is 20% for all years. The current year is 2022. Which of the following statements is true regarding the differences between accounting and tax depreciation? The 2022 beginning balance in the deferred tax liability is $.6M, the 2022 difference is originating, and the desired ending balance in the 2022 deferred tax liability is $.4M. The 2022 beginning balance in the deferred tax liability is $.6M, the 2022 difference is reversing, and the desired ending balance in the 2022 deferred tax liability is $.4M. The 2022 beginning balance in the deferred tax liability is $.4M, the 2022 difference is reversing, and the desired ending balance in the 2022 deferred tax liability is $.6M. The 2022…
Ayres Services acquired an asset for $116 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020, and 2021 are as follows: (S in millions) 2019 $ 420 $ 440 $ 455 29.0 2018 2020 2021 $ 490 Pretax accounting income Depreciation on the income statement Depreciation on the tax return 29.0 29.0 29.0 (34.0) (42.0) (24.0) 415 $ 427 (16.0) $ 503 Taxable income $ 460 Required: Determine (a) the temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Show all amounts as positive amounts. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Beginning of 2018 End of…
Bridgeport Corp. purchased depreciable assets costing $36,600 on January 2, 2023. For tax purposes, the company uses CCA in a class that has a 30% rate. For financial reporting purposes, the company uses straight-line depreciation over five years. The enacted tax rate is 25% for all years. This depreciation difference is the only reversing difference the company has. Calculate the amount of capital cost allowance and depreciation expense from 2023 to 2027, as well as the corresponding balances for the carrying amount and undepreciated capital cost of the depreciable assets at the end of each of the years 2023 to 2027. Assume that these assets are considered “eligible equipment” for purposes of the Accelerated Investment Incentive (under the AII, instead
Visano
Ayres Services acquired an asset for $82 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020, and 2021 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return. Taxable income. ($ in millions) 2019 355 $ 20.5 (33.5) Temporary Difference Deferred Tax Liability 2018 $ 335 $ 20.5 (25.5) $ 330 $ 342 $ 375 2020 2021 370 $ 405 20.5 20.5 (15.5) (7.5) $ 418 Required: Determine (a) the temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Show all amounts as positive amounts. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should…

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS