The following facts relate to Crane Corporation.1.Deferred tax liability, January 1, 2025, $30,600.2.Deferred tax asset, January 1, 2025, $10,200.3.Taxable income for 2025, $107,100.4.Cumulative temporary difference at December 31, 2025, giving rise to future taxable amounts, $234,600.5.Cumulative temporary difference at December 31, 2025, giving rise to future deductible amounts, $96,900.6.Tax rate for all years, 20%. No permanent differences exist.7.The company is expected to operate profitably in the future.(a)Your answer is incorrect.Compute the amount of pretax financial income for 2025.Pretax financial income$21420

The objective of the question is to calculate the pretax financial income for Crane Corporation for…

Answered: The following facts relate to Crane…

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 information that follows pertains to Esther Food Products: a. At December 31, 2024, temporary differences were associated with the following future taxable (deductible) amounts: Depreciation Prepaid expenses Warranty expenses b. No temporary differences existed at the beginning of 2024. c. Pretax accounting income was $46,000 and taxable income was $9,000 for the year ended December 31, 2024. d. The tax rate is 25%. Required: Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2024. Complete this question by entering your answers in the tabs below. Calculation General Journal $ 32,000 11,000 (6,000) Complete the following table given below to record income taxes for 2024. Note: Amounts to be deducted should be entered with a minus sign. Description Pretax accounting income Permanent differences Income subject to taxation Temporary Differences Income taxable in current year $ Amount 46,000 X Tax Rate = x X Recorded as:
At December 31, 2022, Ivanhoe Corporation had a temporary difference (related to pensions) and reported a related deferred tax asset of $32,700 on its balance sheet. At December 31, 2023, Ivanhoe has five temporary differences. An analysis reveals the following: Future (Taxable) Deductible Amounts emporary Difference oks; deductible when funded for tax purposes 2024 2025 2026 $32,700 $22,700 $10,000 earned for accounting purposes and when received for tax purposes 76,000 accounting purposes and recognized for tax purposes when paid alment sales when sold for book purposes, and as collected for tax purposes 24,000 (36,300) (36,300) (36,300) iting purposes, and CCA for tax purposes (90,300) (50,000) (40,000) $6,100 ($63,600) ($66,300) The enacted tax rate has been 30% for many years. In November 2023, the rate was changed to 28% for all periods after January 1, 2025. Assume that the company has income tax due of $180,000 on the 2023 tax return and that Ivanhoe follows IFRS. (a) Indicate…
Teal Company reports pretax financial income of $72,600 for 2020. The following items cause taxable income to be different than pretax financial income. 1. Depreciation on the tax return is greater than depreciation on the income statement by $17,200. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $20,300. 3. Fines for pollution appear as an expense of $9,900 on the income statement. Teal’s tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2020. (a) Compute taxable income and income taxes payable for 2020. Taxable income $enter a dollar amount Income taxes payable $enter a dollar amount
The following information is available for Sandhill Corporation for 2019 (its first year of operations). 1. Excess of tax depreciation over book depreciation, $40,400. This $40,400 difference will reverse equally over the years 2020–2023. 2. Deferral, for book purposes, of $19,900 of rent received in advance. The rent will be recognized in 2020. 3. Pretax financial income, $284,700. 4. Tax rate for all years, 20%.
At December 31, 2025, Pronghorn Corporation had a deferred tax liability of $353,600, resulting from future taxable amounts of $2,080,000 and an enacted tax rate of 17%. In May 2026, a new income tax act is signed into law that raises the tax rate to 20% for 2026 and future years. Prepare the journal entry for Pronghorn to adjust the deferred tax liability. (List debit entry before credit entry. 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 O for the amounts.) Account Titles and Explanation eTextbook and Media List of Accounts Save for Later Debit Credit Attempts: 0 of 3 used Submit Answer
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 $80,000 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 $40,000. MACRS depreciation expense for 2019 was $100,000.• Warranty expense of $20,000 was recognized on the 2019 income statement, while $5,000 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 difference. The tax…
Sheridan Company reported the following results for the year ended December 31, 2020, its first year of operations: Income (per books before income taxes) $3343000 Taxable income 4466000 The disparity between book income and taxable income is attributable to a temporary difference, which will reverse in 2021. What should Sheridan record as a net deferred tax asset or liability for the year ended December 31, 2020, assuming that the enacted tax rates in effect are 35% in 2020 and 30% in 2021? O $393050 deferred tax liability $336900 deferred tax liability $393050 deferred tax asset $336900 deferred tax asset
1. Pretax accounting income was S70 million and taxable income was $8 million for the year ended December 31, 2021. 2. The difference was due to three items: a. Tax depreciation exceeds book depreciation by $60 million in 2021 for the business complex acquired that year. This amount is scheduled to be $80 million in 2022 and to reverse as ($70 million) and ($70 million) in 2023 and 2024, respectively. b Insurance of $8 millian was paid in 2021 for 2022 coverage C. A $6 million loss contingency was accrued in 2021, to be paid in 2023. 3. No temporary differences existed at the beginning of 2021. 4. The tax rate is 25% Required: 1. Determine the amounts necessary to record income taxes for 2021, and prepare the appropriate journal entry 2. Assume the enacted federal income tax law specifies that the tax rate will change from 25% ta 20% in 2023. When scheduling the reversal of the depreciation difference, you were uncertain as to how to deal with the fact that the difference will continue…
Nash Corporation has one temporary difference at the end of 2020 that will reverse and cause taxable amounts of $53,100 in 2021, $57,800 in 2022, and $63,100 in 2023. Nash’s pretax financial income for 2020 is $312,000, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2020. (a) Compute taxable income and income taxes payable for 2020. Taxable income $enter a dollar amount Income taxes payable $enter a dollar amount (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020. (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.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account…
At the end of 2022, its first year of operations, Zekany's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $ 210,000 Permanent difference (14,200 ) 195,800 Temporary difference-depreciation (19,100 ) Taxable income $ 176,700 Zekany's tax rate is 25%. No estimated taxes have been paid. What should Zekany report as income tax payable for 2022?
Sunland Company reports pretax financial income of $72,600 for 2025. The following items cause taxable income to be different than pretax financial income. 2. Depreciation on the tax return is greater than depreciation on the income statement by $17,200. Rent collected on the tax return is greater than rent recognized on the income-statement by $20,300. 3. Fines for pollution appear as an expense of $9,900 on the income statement. Sunland's tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2025. (a) X Your answer is incorrect. Compute taxable income and income taxes payable for 2025. Taxable income $ 92500 Income taxes payable $ 27750
The following facts relate to Sandhill Corporation. 1. Deferred tax liability, January 1, 2025, $33,000. 2. Deferred tax asset, January 1, 2025, $11,000. 3. Taxable income for 2025, $115,500. 4. 5. 6. 7. Cumulative temporary difference at December 31, 2025, giving rise to future taxable amounts, $253,000. Cumulative temporary difference at December 31, 2025, giving rise to future deductible amounts, $104,500. Tax rate for all years, 20%. No permanent differences exist. The company is expected to operate profitably in the future. (a) X Your answer is incorrect. Compute the amount of pretax financial income for 2025. Pretax financial income $ 116875

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