Sunland, Inc. uses the accrual method of accounting for financial reporting purposes and appropriately uses the installment method ofaccounting for income tax purposes. Installment income of $2700000 will be collected in the following years when the enacted taxrates are:Collection of IncomeEnacted Tax Rates2024$24000025%202554000020%202684600020%2027107400015%The installment income is Sunland's only temporary difference. What amount should be reported as a deferred income tax liability inSunland's December 31, 2024 balance sheet?$675000○ $615000○ $507300○ $438300

The objective of the question is to calculate the deferred income tax liability to be reported in…

Answered: Sunland, Inc. uses the accrual method…

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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The ABC Company has determined that its taxable income for the year 2021 is P3,000,000. The following related facts were gathered (Income tax rate for current and future years is 30%): Cumulative temporary differences, 12/31/2021Taxable temporary differences- P1,480,000Deductible temporary differences- P750,000 Permanent differences:Non-taxable revenue- P200,000Non-deductible expenses- P600,000 Deferred tax asset, December 31, 2020- P150,000Deferred tax liability, December 31, 2020- P300,000 How much is the total income tax expense (current and deferred) for the year 2021? A.P969,000 B.P900,000 C.P831,000 D.P813,000
Omskirt Company reported an excess of warranty expense over warranty deductions of P720,000 for the year ended December 31, 2019. This temporary difference will reverse in equal amounts over the years 2020 through 2022. The enacted tax rates are as follows: 2019 - 30% 2020 - 32% 2021 - 34% 2022 - 36% The reporting for this temporary difference at December 31, 2019 would be: a. deferred tax liability of P216,000. b. deferred tax asset of P244,800. c. deferred tax liability of P244,800. d. deferred tax asset of P216,000.
During 2020, Marigold Co.’s first year of operations, the company reports pretax financial income at $247,300. Marigold’s enacted tax rate is 45% for 2020 and 20% for all later years. Marigold expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2020, are summarized as follows. Future Years 2021 2022 2023 2024 2025 Total Future taxable (deductible) amounts: Installment sales $33,800 $33,800 $33,800 $101,400 Depreciation 5,800 5,800 5,800 $5,800 $5,800 29,000 Unearned rent (47,000) (47,000) (94,000) Complete the schedule below to compute deferred taxes at December 31, 2020. (Negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)…
The following information is taken from Igado Company’s 2020 financial records: Pretax accounting income- P1,500,000 Accrued warranty in excess of actual warranty expenditures- P24,500 Excess tax depreciation- P45,000 Taxable income- P1,479,500 The temporary differences were created entirely in 2020. The future deductible amount is expected to reverse in 2021 and the future taxable amount will reverse in equal amounts in the next three years. Tax rates are: 30% in 2020; 32% in 2021; 34% in 2022 and 35% in 2023. How much should Igado Company report as deferred tax asset and deferred tax liability, respectively, at December 31, 2020? A. P7,840 and P14,400 B. P7,350 and P15,150 C. P7,350 and P14,400 D. P7,840 and P15,150
Swifty Corporation recorded warranty accruals as at December 31, 2020 in the amount of $151,800. This reversing difference will cause deductible amounts of $50,300 in 2021, $36,000 in 2022, and $65,500 in 2023. No other reversing difference exists. Swifty’s accounting income for 2020 is $144,000 and $175,000 in each of 2021 and 2022 and the tax rate is 25%. There are no deferred tax accounts at the beginning of 2020. Swifty Corporation was informed on December 31, 2021 that the enacted rate for 2022 and subsequent years is 28%. Calculate the deferred tax balances at December 31, 2021, and 2022. 2021 2022 Deferred tax asset $ $ eTextbook and Media List of Accounts Calculate taxable income and income tax payable for 2021 and 2022. 2021 2022 Taxable income $ $ Income tax payable $ $
Wildhorse Company has the following two temporary differences between its income tax expense and income taxes payable. 2025 2026 2027 Pretax financial income $820,000 $927,000 $912,000 Excess depreciation expense on tax return (28,700) (42,000) (9,700) Excess warranty expense in financial income Taxable income 20,100 10,400 7,800 $811,400 $895,400 $910,100 The income tax rate for all years is 20%. (a) Your answer is partially correct. Assuming there were no temporary differences prior to 2025, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2025, 2026, and 2027. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
Oriole Corporation recorded warranty accruals as at December 31, 2023, in the amount of $154,000. This reversing difference will cause deductible amounts of $50,300 in 2024, $38,200 in 2025, and $65,500 in 2026. No other reversing difference exists. Oriole's accounting income is $166,000 in each of 2024 and 2025 and the tax rate is 25% for all years. The warranty expenditures occurred as expected. There are no deferred tax accounts at the beginning of 2023. (a) Calculate the deferred tax balances at December 31, 2024 and 2025. Deferred tax eTextbook and Media List of Accounts. 2024 2025
None
ABC Corporation prepared the following reconciliation for its first year of operations:· Pretax financial income for 2020- P1,200,000· Tax exempt interest- P100,000· Taxable temporary difference - P300,000The temporary difference will reverse evenly over the next two years at an enacted tax rate of 40%. The enacted tax rate for 2020 is 28%. What amount should be reported in its 2020 income statement as the current portion of its provision for income taxes?
Sherrod, Inc., reported pretax accounting income of $70 million for 2021. The following information relates to differences between pretax accounting income and taxable income: Income from installment sales of properties included in pretax accounting income in 2021 exceeded that reported for tax purposes by $4 million. The installment receivable account at year-end 2021 had a balance of $6 million (representing portions of 2020 and 2021 installment sales), expected to be collected equally in 2022 and 2023. Sherrod was assessed a penalty of $1 million by the Environmental Protection Agency for violation of a federal law in 2021. The fine is to be paid in equal amounts in 2021 and 2022. Sherrod rents its operating facilities but owns one asset acquired in 2020 at a cost of $60 million. Depreciation is reported by the straight-line method, assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the first two years but…
12) Ehrlich Corporation prepared the following reconciliation for its first year of operations: Pretax financial income for 2021 $2,550,000 Excess depreciation expense (450,000) Taxable income $2,100,000 The temporary difference will reverse evenly over the next two years at an enacted tax rate of 30%. The enacted tax rate for 2021 is 20%. Prepare the journal entry for the income taxes for 2021
An entity was organized on January I, 2019. The entity had pretax accounting income of P5,000,000 and taxable income of P7,000,000 for the current year. The only temporary difference is accrued product warranty cost that is expected to be paid in 2080. The enacted tax rates are 30% for 2019 and 25% for 2020 and thereafter. What amount should be reported as total income tax expense in the income statement for 2019?

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