Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences:   SITUATION 1 2 Taxable income $ 48,000 $ 88,000 Amounts at year-end:         Future deductible amounts   5,800   10,800 Future taxable amounts   0   5,800 Balances at beginning of year, dr (cr):         Deferred tax asset $ 1,000 $ 3,240 Deferred tax liability   0   1,000        The enacted tax rate is 30% for both situations.   Required: For each situation determine the:                                  Situation 1 and 2   a. income tax payable currently b. deferred tax asset - balance at year-end c. deferred tax asset change dr or cr for the year d. deferred tax liability - balance at year-end e. deferred tax liability change dr or cr for the year f. income tax expense for the year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences:
 

SITUATION 1 2
Taxable income $ 48,000 $ 88,000
Amounts at year-end:        
Future deductible amounts   5,800   10,800
Future taxable amounts   0   5,800
Balances at beginning of year, dr (cr):        
Deferred tax asset $ 1,000 $ 3,240
Deferred tax liability   0   1,000
 

    
The enacted tax rate is 30% for both situations.
 
Required:
For each situation determine the:                                  Situation 1 and 2 
 a. income tax payable currently

b. deferred tax asset - balance at year-end

c. deferred tax asset change dr or cr for the year

d. deferred tax liability - balance at year-end

e. deferred tax liability change dr or cr for the year

f. income tax expense for the year. 

 

 

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