what amount of accrued liability would Raven have reported in its December 31, 2026 statement of financial position?
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During 2026, Raven Company became involved in a tax dispute with BIR. At December 31, 2026, Raven’s tax advisor believed that an unfavorable outcome was probable and a reasonable estimate of additional taxes was P5,000,000 but could be as much as P6,500,000. After the 2026 financial statements were issued, Raven received and accepted a BIR settlement offer of P5,500,000.
- Assume that the company accepted the BIR settlement offer of P5,500,000 before the 2026 financial statements were issued, what amount of accrued liability would Raven have reported in its December 31, 2026
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- On December 31, 2022, Big Bear Corporation reports liabilities with a tax basis of $1,200,000 and a book basis of $1,700,000. There was no difference in the asset basis. The difference in liability basis arose from temporary differences that would reverse in the following years: 2023 $120,000 2024 $110,000 2025 $112,000 2026 $80,000 2027 $78,000 Assuming a tax rate of 40% for 2022 - 2025 and a rate of 45% for 2026 - 2027, what should Big Bear report on its balance sheet on December 31, 2022? Group of answer choices deferred tax liability of $200,000 deferred tax asset of $207,900 deferred tax liability of $207,900 deferred tax asset of $200,000Pronghorn Inc. incurred a net operating loss of $583,900 in 2023. Combined income for 2020, 2021, and 2022 was $464,400. The tax rate for all years is 30%. Assume that it is more likely than not that the entire tax loss carryforward will not be realized in future years. Assume that Pronghorn earns taxable income of $20,300 in 2024 and that at the end of 2024 there is still too much uncertainty to recognize a deferred tax asset. (a) Prepare the journal entries that are necessary at the end of 2024 assuming that Pronghorn does not use a valuation allowance account. (List all debit entries before credit entries. Credit account titles are automatically indented when the 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.) Year Account Titles and Explanation 2024 2024 (To record current tax expense) (To record current tax benefit) Debit CreditFore Farms reported a pretax operating loss of $176 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $4 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $10 million from accruing a loss contingency. The loss will be tax deductible when paid in 2025. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above. Taxable income in Fores’s two previous years of operation was as follows: 2022 $ 80 million 2023 $ 56 million Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $208 million. No additional temporary differences originate in 2025.
- A company had pretax financial income of $796,000 in 2021. During 2021, the following items cause taxable income to be different than pretax financial income: Depreciation for tax purposes in excess of book depreciation $7,000 Fines resulting from a violation of law 2,170 Received advance rent payment. The rent is for 2022. 7,140 What is taxable income for the company in 2021?Shwonson Industries reported a deferred tax asset of $5 million for the year ended December 31, 2020, related to a temporary difference of $20 million. The tax rate was 25%. The temporary difference is expected to reverse in 2022, at which time the deferred tax asset will reduce taxable income. There are no other temporary differences in 2020–2022. Assume a new tax law is enacted in 2021 that causes the tax rate to change from 25% to 15% beginning in 2022. (The rate remains 25% for 2021 taxes.) Taxable income in 2021 is $30 million.Required:Determine the effect of the tax rate change and prepare the appropriate journal entry to record Shwonson’s income tax expense in 2021. What effect, if any, will enacting the change in the 2022 tax rate have on Shwonson’s 2021 net income?Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern's fiscal year ends December 31, and the 2024 financial statements are issued on March 15, 2025. a. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2025, judgment was rendered against Eastern in the amount of $114 million plus interest, a total of $129 million. Eastern plans to appeal the judgment and is unable to predict its outcome though it is not expected to have a material adverse effect on the company. b. In November 2023, the State of Nevada filed suit against Eastern, seeking civil penalties and injunctive relief for violations of environmental laws regulating hazardous waste. On January 12, 2025, Eastern reached a settlement with state authorities. Based upon discussions with legal counsel, the Company feels it is probable that $147 million will be required to cover the cost of violations. Eastern believes that…
- Fore Farms reported a pretax operating loss of $200 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $8 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $30 million from accruing a loss contingency. The loss will be tax deductible when paid in 2025. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above. Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2024. 2. What is the net loss reported in 2024 income statement? 3. Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $215 million. No additional temporary differences originate in 2025.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 $ 27750Wildhorse Company deducts insurance expense of $201000 for tax purposes in 2021, but the expense is not yet recognized for accounting purposes. In 2022, 2023, and 2024, no insurance expense will be deducted for tax purposes, but $67000 of insurance expense will be reported for accounting purposes in each of these years. Wildhorse Company has a tax rate of 20% and income taxes payable of $174000 at the end of 2021. There were no deferred taxes at the beginning of 2021.What is the amount of the deferred tax liability at the end of 2021?
- Fore Farms reported a pretax operating loss of $210 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $10 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $10 million from accruing a loss contingency. The loss will be tax deductible when paid in 2025. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above. Required: Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2024. What is the net loss reported in 2024 income statement? Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $235 million. No additional temporary differences originate in 2025.Fore Farms reported a pretax operating loss of $150 million for financial reporting purposes in 2021. Contributing to the loss were (a) a penalty of $10 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2021 and (b) an estimated loss of $20 million from accruing a loss contingency. The loss will be tax deductible when paid in 2022. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2021 other than those described above. Required:1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2021.2. What is the net operating loss reported in 2021 income statement?3. Prepare the journal entry to record income taxes in 2022 assuming pretax accounting income is $155 million. No additional temporary differences originate in 2022.Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each is described below. Eastern’s fiscal year ends December 31, and the 2021 financial statements are issued on March 15, 2022. Eastern is involved in a lawsuit resulting from a dispute with a supplier. On February 3, 2022, judgment was rendered against Eastern in the amount of $124 million plus interest, a total of $139 million. Eastern plans to appeal the judgment and is unable to predict its outcome though it is not expected to have a material adverse effect on the company. In November 2020, the State of Nevada filed suit against Eastern, seeking civil penalties and injunctive relief for violations of environmental laws regulating hazardous waste. On January 12, 2022, Eastern reached a settlement with state authorities. Based upon discussions with legal counsel, the Company feels it is probable that $157 million will be required to cover the cost of violations. Eastern believes that the…