Times-Roman Publishing Company reports the following amounts in its first three years of operation: ($ in thousands) Pretax accounting income Taxable income 2024 $ 400 440 2025 $ 400 2026 $ 360 390 410 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? Answer is not complete. Complete this question by entering your answers in the tabs below. 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). 23 2. Cumulative temporary difference 3. Deferred tax asset Beginning of 2024 End of 2024 End of 2025 End of 2026 0.0 $ 40 $ 10 $ 50 0.0 10 < Req 1 Req 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 $ 400 440 2025 $ 400 2026 $ 360 390 410 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? Answer is not complete. Complete this question by entering your answers in the tabs below. 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). 23 2. Cumulative temporary difference 3. Deferred tax asset Beginning of 2024 End of 2024 End of 2025 End of 2026 0.0 $ 40 $ 10 $ 50 0.0 10 < Req 1 Req 2 and 3 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
am.104.
Transcribed Image Text:Times-Roman Publishing Company reports the following amounts in its first three years of operation:
($ in thousands)
Pretax accounting income
Taxable income
2024
$ 400
440
2025
$ 400
2026
$ 360
390
410
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?
Answer is not complete.
Complete this question by entering your answers in the tabs below.
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).
23
2. Cumulative temporary difference
3.
Deferred tax asset
Beginning
of 2024
End of
2024
End of
2025
End of
2026
0.0 $
40 $
10 $
50
0.0
10
< Req 1
Req 2 and 3 >
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