Times-Roman Publishing Company reports the following amounts in its first three years of operation: ($ in thousands) Pretax accounting income Taxable income 2024 $ 390 430 The difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine subscriptions being reported for tax purposes in the year received, but reported in the income statement in later years when the performance obligation is satisfied. The income tax rate is 25% each year. Times-Roman anticipates profitable operations in the future. Required: 1. What is the balance sheet account that gives rise to a temporary difference in this situation? 2. For each year, indicate the cumulative amount of the temporary difference at year-end. 3. Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax liability? Complete this question by entering your answers in the tabs below. 2 Cumulative temporary difference 3. 2025 $ 390 370 Req 1 Req 2 and 3 2. For each year, indicate the cumulative amount of the temporary difference at year-end. 3. Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax liability? Note: Enter all amounts as positive values. Enter your answers in thousands (i.e., 5,000 should be entered as 5). End of 2025 End of 2026 Beginning of 2024 $ $ < Req 1 2026 $ 350 390 End of 2024 0.0 $ 0.0 $ 40 10 Reg 2 and 3
Times-Roman Publishing Company reports the following amounts in its first three years of operation: ($ in thousands) Pretax accounting income Taxable income 2024 $ 390 430 The difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine subscriptions being reported for tax purposes in the year received, but reported in the income statement in later years when the performance obligation is satisfied. The income tax rate is 25% each year. Times-Roman anticipates profitable operations in the future. Required: 1. What is the balance sheet account that gives rise to a temporary difference in this situation? 2. For each year, indicate the cumulative amount of the temporary difference at year-end. 3. Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax liability? Complete this question by entering your answers in the tabs below. 2 Cumulative temporary difference 3. 2025 $ 390 370 Req 1 Req 2 and 3 2. For each year, indicate the cumulative amount of the temporary difference at year-end. 3. Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax liability? Note: Enter all amounts as positive values. Enter your answers in thousands (i.e., 5,000 should be entered as 5). End of 2025 End of 2026 Beginning of 2024 $ $ < Req 1 2026 $ 350 390 End of 2024 0.0 $ 0.0 $ 40 10 Reg 2 and 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Vishal
Transcribed Image Text:Times-Roman Publishing Company reports the following amounts in its first three years of operation:
(s in thousands)
Pretax accounting income
Taxable income
2024
$ 390
430
The difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine
subscriptions being reported for tax purposes in the year received, but reported in the income statement in later years when the
performance obligation is satisfied. The income tax rate is 25% each year. Times-Roman anticipates profitable operations in the future
Required:
1. What is the balance sheet account that gives rise to a temporary difference in this situation?
2. For each year, indicate the cumulative amount of the temporary difference at year-end.
3. Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax
liability?
Complete this question by entering your answers in the tabs below.
2 Cumulative temporary difference
3.
2025
$ 390
370
Req 1 Req 2 and 3
2. For each year, indicate the cumulative amount of the temporary difference at year-end.
3. Determine the balance in the related deferred tax account at the end of each year. Is it a deferred tax asset or a deferred tax
liability?
Note: Enter all amounts as positive values. Enter your answers in thousands (i.e., 5,000 should be entered as 5).
End of 2025 End of 2026
Beginning of
2024
$
$
< Req1
2026
$ 350
390
End of 2024
0.0 $
0.0 $
40
10
Reg 2 and 3>
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Recommended textbooks for you
Accounting
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,
Accounting
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