The following data represents the complete taxable income history for a corporation: Year Taxable Income Tax Rate 2014 $15,000 30% 2015 10,000 30% 2016 20,000 28% 2017 15,000 27% 2018 (60,000) 25% 2019 (25,000) 28% 2020 55,000 30% Tax rates are effective for the year indicated. The rates were enacted in the year in which they became effective. Taxable income (loss) was equal to accounting income (loss) in each year. Required: Prepare income tax entries for 2018, 2019 and 2020. In any year, management estimates the corporation will be able to utilize all loss carryforward balances.

The following data represents the complete taxable income history for a corporation: Year Taxable Income Tax Rate 2014 $15,000 30% 2015 10,000 30% 2016 20,000 28% 2017 15,000 27% 2018 (60,000) 25% 2019 (25,000) 28% 2020 55,000 30% Tax rates are effective for the year indicated. The rates were enacted in the year in which they became effective. Taxable income (loss) was equal to accounting income (loss) in each year. Required: Prepare income tax entries for 2018, 2019 and 2020. In any year, management estimates the corporation will be able to utilize all loss carryforward balances.

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 2025 Vaughn Corporation had pretax financial income of $185,000 and taxable income of $117,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The effective tax rate is 30%. Compute the amount to be reported as income taxes payable at December 31, 2025
Assume the following facts for Munoz Company in 2019. Munoz reported pretax financial income of $800,000. In addition, Munoz reported the following differences between its pretax financial income and taxable income: • Interest income of $60,000 was received during 2019 from an investment in municipal bonds. This income is exempt for tax purposes. • Rent income of $40,000 was collected in 2018 and included for tax purposes during that year. For financial statement purposes, it will be reported as earned equally in 2019 and 2020. • An asset with a 5-year life was purchased during 2019; straight-line depreciation for book purposes was $50,000. MACRS depreciation expense for 2019 was $100,000. • Warranty expense of $20,000 was recognized on the 2019 income statement, while $4,000 was recognized for tax purposes. (Assume a 1-year warranty contract.) The balance of the Deferred Tax Asset account (debit) at January 1, 2019, was $16,000 as a result of the rent income temporary…
The accounting income of Sunland Corporation and its taxable income for the years 2023 to 2026 are as follows: Year Accounting Income Taxable Income Tax Rate 2023 $467,000 $304,000 25% 2024 428,000 304,000 30% 2025 400,000 315,000 30% 2026 464,000 647,000 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 $41,000 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. (a) 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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The following facts relate to Crane Corporation. Deferred tax liability, January 1, 2025, $30,600. Deferred tax asset, January 1, 2025, $10,200. Taxable income for 2025,$107,100. Cumulative temporary difference at December 31,2025 , giving rise to future taxable amounts, $234,600. Cumulative temporary difference at December 31,2025 , giving rise to future deductible amounts, $96,900. Tax rate for all years, 20%. No permanent differences exist. The company is expected to operate profitably in the future. (a) Compute the amount of pretax financial income for 2025. Pretax financial income $
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The following facts relate to Krung Thep Corporation: Deferred tax liability, January 1, 2015, $40,000 Deferred tax asset, January 1, 2015, $0 Taxable income for 2015, $115,000 Pretax financial income for 2015, $200,000 Cumulative temporary difference at December 31, 2015, giving rise to future taxable amounts, $220,000 Cumulative temporary difference at December 31, 2015, giving rise to future deductible amounts, $35, 000 Tax rate for all years, 40% The company is expected to operate profitably in the future. Instructions: Compute income taxes payable for 2015. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015. Prepare the income tax expense section of the income statement for 2015, beginning with the line “income before income taxes.”
For 2022, MSU Corporation has $500,000 of adjusted taxable income, $22,000 of business interest income, and $120,000 of business interest expense. It has average annual gross receipts of more than $27,000,000 over the prior three taxable years. a. What is MSU's interest expense deduction for 2022? b. How much interest expense can be deducted for 2022 if MSU's adjusted taxable income is $300,000?
In the year 2019, a corporation made $18.5 Million in revenue, $2.4 Million of operating expenses, and depreciation expenses of $7.5 Million. The state income tax rate is 9% and the federal income tax rate is 21%. How much (a) state income tax, and (b) federal income tax will this corporation pay in this tax year? Assume that the state income tax is a tax-deductable expence when filing federal income tax. The approximate state income tax is $ Million (Round to three decimal places.) The approximate federal tax is $ Million. (Round to three decimal places.) The combined effective income tax rate is%. (Round to the nearest decimal.) The ATCF for the year 2019 is $ Million. (Round to three decimal places.) 31-