Troy Ltd., at the end of 2023, its first year of operations, prepared a reconciliation between pre-tax accounting income and taxable income as follows: Pre-tax accounting income $300,000 Excess CCA claimed for tax purposes (600,000) Estimated expenses deductible when paid $200,000 Use of the depreciable assets will result in taxable .... 500,000 Taxable income amounts of $200,000 in each of the next three years. The estimated expenses of $500,000 will be deductible in 2026 when settlement is expected to be made. The enacted tax rate is 25% and is to increase to 30%, starting in 2024. Instructions a) Prepare a schedule of the deferred taxable and deductible amounts. b) Prepare the required adjusting entries to record income taxes for 2023

Troy Ltd., at the end of 2023, its first year of operations, prepared a reconciliation between pre-tax accounting income and taxable income as follows: Pre-tax accounting income $300,000 Excess CCA claimed for tax purposes (600,000) Estimated expenses deductible when paid $200,000 Use of the depreciable assets will result in taxable .... 500,000 Taxable income amounts of $200,000 in each of the next three years. The estimated expenses of $500,000 will be deductible in 2026 when settlement is expected to be made. The enacted tax rate is 25% and is to increase to 30%, starting in 2024. Instructions a) Prepare a schedule of the deferred taxable and deductible amounts. b) Prepare the required adjusting entries to record income taxes for 2023

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

Troy Ltd., at the end of 2023, its first year of operations, prepared a reconciliation between pre- tax accounting income and taxable income as follows: Pre-tax accounting income
$300,000 Excess CCA claimed for tax purposes
... (600, 000) Estimated expenses deductible when paid
$200,000 Use of the depreciable assets will result in taxable
500,000 Taxable income ...
amounts of $200,000 in each of the next three years. The estimated expenses of $500,000 will be deductible in 2026 when settlement is expected to be made. The enacted tax rate is 25% and is to increase
to 30%, starting in 2024. Instructions a) Prepare a schedule of the deferred taxable and deductible amounts. b) Prepare the required adjusting entries to record income taxes for 2023

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