A-1 The accounting income of Cullumber Corporation and its taxable income for the years 2023 to 2026 are as follows:Year Accounting Income2023202420252026(a)$469,000-429,000392,000469,000Taxable Income$301,000303,000Your answer is partially correct.310,000643,000Tax Rate25%30%The change in the tax rate from 25% to 30% was not enacted until early in 2024.Accounting income for each year includes an expense of $45,000 that will never be deductible for tax purposes. The remainder of thedifference between accounting income and taxable income in each period is due to one reversing difference for the depreciation ofproperty, plant, and equipment. No deferred taxes existed at the beginning of 2023.30%30%Calculate the current and deferred tax expense or benefit for each of the four years. Also calculate the balance of the deferred taxbalance sheet account at the end of each fiscal year from 2023 to 2026. (Show asset and benefit numbers as positive, andliability and expense numbers as negative.)

Deferred tax asset: The deferred tax asset is created when the taxes to be paid as per income tax…

The accounting income of Cullumber Corporation and its taxable income for the years 2023 to 2026 are as follows: Year Accounting Income 2023 2024 2025 2026 $469,000 429,000 392,000 469,000 Taxable Income $301,000 303,000 310,000 643,000 Tax Rate 25% 30% 30% 30%

The accounting income of Cullumber Corporation and its taxable income for the years 2023 to 2026 are as follows: Year Accounting Income 2023 2024 2025 2026 $469,000 429,000 392,000 469,000 Taxable Income $301,000 303,000 310,000 643,000 Tax Rate 25% 30% 30% 30%

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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Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

A-1

The accounting income of Cullumber Corporation and its taxable income for the years 2023 to 2026 are as follows:
Year Accounting Income
2023
2024
2025
2026
(a)
$469,000
-
429,000
392,000
469,000
Taxable Income
$301,000
303,000
Your answer is partially correct.
310,000
643,000
Tax Rate
25%
30%
The change in the tax rate from 25% to 30% was not enacted until early in 2024.
Accounting income for each year includes an expense of $45,000 that will never be deductible for tax purposes. The remainder of the
difference between accounting income and taxable income in each period is due to one reversing difference for the depreciation of
property, plant, and equipment. No deferred taxes existed at the beginning of 2023.
30%
30%
Calculate the current and deferred tax expense or benefit for each of the four years. Also calculate the balance of the deferred tax
balance sheet account at the end of each fiscal year from 2023 to 2026. (Show asset and benefit numbers as positive, and
liability and expense numbers as negative.)

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