Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2021 through 2024 except for differences in depreciation on an operational asset. The asset cost $160.000 and is depreciated for income tax purposes in the following amounts: 2021 2022 2023 $52, 8e0 78, 48e 24, eee 12, 8ee 2024 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows: 2021 $98,eee $118,8ee s1e0, 0ee s1ee, eee 2022 2023 2024 Accounting income before taxes and depreciation Assume the income tax rate for 2021 and 2022 was 30%; however, during 2022. tax legislation was passed to raise the tax rate to 40% beginning in 2023. The 40% rate remained in effect through the years 2023 and 2024. Both the accounting and income tax periods end December 31. Required: Prepare the journal entries to record income taxes for the years 2021 through 2024. (If no entry is required for a transaction/event, select "No journal entry requlred" In the first account fleld.)

Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2021 through 2024 except for differences in depreciation on an operational asset. The asset cost $160.000 and is depreciated for income tax purposes in the following amounts: 2021 2022 2023 $52, 8e0 78, 48e 24, eee 12, 8ee 2024 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows: 2021 $98,eee $118,8ee s1e0, 0ee s1ee, eee 2022 2023 2024 Accounting income before taxes and depreciation Assume the income tax rate for 2021 and 2022 was 30%; however, during 2022. tax legislation was passed to raise the tax rate to 40% beginning in 2023. The 40% rate remained in effect through the years 2023 and 2024. Both the accounting and income tax periods end December 31. Required: Prepare the journal entries to record income taxes for the years 2021 through 2024. (If no entry is required for a transaction/event, select "No journal entry requlred" In the first account fleld.)

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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Dineshbhai
Acme Company uses an accelerated depreciation method for income tax purposes and the straight-line depreciation method for financial reporting purposes. As of December 31, 2018, Acme has a $100,000 taxable temporary difference (tax-effected amount) on its balance sheet related to the book and tax basis difference in fixed assets (from depreciation). In 2019, depreciation for income tax purposes was $200,000, while depreciation for financial reporting purposes was $260,000. If the income tax rate is 25% and no other temporary or permanent differences exist, what would the ending deferred tax balance as of 12/31/19 be?
Big Bear Sporting Goods opened in 2022. They reported sales revenue of $375,000 and expenses of $460,000. There are no permanent or temporary differences, so the book loss and taxable loss will be the same. Big Bear plans on carrying forward the net operating loss (NOL). Assuming a 32% tax rate, what is the necessary journal entry in 2022 to record the NOL carryforward? Group of answer choices Deferred Tax Asset 27,200 Income Tax Benefit 27,200 Deferred Tax Asset 120,000 Income Tax Benefit 120,000 Income Tax Refund Receivable 120,000 Income Tax Benefit 120,000 Income Tax Refund Receivable 27,200 Income Tax Benefit 27,200
CC corporation (a calendar-year C corporation) has a net operating loss (NOL) carryover to 2021 in the amount of $30,000. How much tax will SCC pay for 2021 if it reports taxable income from operations of $20,000 before considering loss carryovers under the following assumptions? (Leave no answer blank. Enter zero if applicable.) a. The NOL originated in 2017. SCC Taxable Income in 2021 b. The NOL originated in 2018. SCC Tax in 2021
Subject : Accounting Bre-X Inc.'s only temporary difference at the beginning and end of 2022 is caused by a $1.5-million deferred gain for tax purposes on an installment sale of a plant asset. The related receivable (only one half of which is classified as a current asset) is due in equal instalments in 2023 and 2024. The related deferred tax liability at the beginning of the year is $300,000. In Quarter three (3) of 2022, a new tax rate of 24% is enacted into law and is scheduled to become effective for 2024. Taxable income is expected in all future years. Required: a. Determine the amount to be reported as a deferred tax liability at the end of 2022. Indicate its proper classification(s) if Bre-X Inc. uses ASPE guidelines. b. Indicate the classification of the Deferred Tax Asset or Deferred Tax Liability account if Bre-X Inc. uses IFRS guidelines. c. Prepare the journal entry (if any) that is necessary to adjust the deferred tax liability when the new tax rate is enacted into law.
Bhil
Janus Corporation purchased major pieces of manufacturing equipment on January 1, 2020 for a total of $42 million. Janus uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, 2022, the book value of the equipment was $36 million and its tax basis was $26 million. At December 31, 2023, the book value of the equipment was $34 million and its tax basis was $19 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2023 was $50 million.Required:1. Prepare the appropriate journal entry to record Janus’s 2023 income taxes. Assume an income tax rate of 25%.2. What is Janus’s 2023 after-tax net income?
D E F G H (Deferred Tax Asset with and without Valuation Account) Nova Sci, Inc. has a deferred tax asset account with a balance of $255,000 at the end of 2024 due to a single cumulative temporary difference. At the end of 2025 this same temporary difference has decreased to a cumulative amount of $750,000. Taxable income for 2025 is $650,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. Instructions (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (b) Assuming that it is more likely than not that one-half of the deferred tax asset will not be realized, prepare the journal entry at the end of 2025 to record the valuation account. (b) NOTES & COMPUTATIONS AREA
Drew Company has a deferred tax asset of $54,000 before recording an allowance of $7000 for estimating it is more likely than not that this amount will not be realized in the future. The result of recording this allowance is The deferred tax asset will now be a net amount of $47,000 Income tax expense will be reduced by $7000 x the tax rate. Income tax expense will be increased by $7000 x the tax rate. Net income will be increased by $7000.
The following is governed by an income tax rate of 25% . Depreciation rate is determined using MACRS A company is considering two alternatives Choice 1 : Amachine is purchased for 60,000. It is a 5 year property class. It will be used for 10 years after which it will have a salvage value of 15,000. It is mostly grey with a metallic steel cover. The Before Tax Cash Flow will be 80,000 per year. The machine is purchased from Retained Earning cash outright. It has no extra deductions associated with it. Choice 2: A machine is purchased for 65,000. It is a 10 year property class object. It will be used for 12 years with a salvage value of 18,000. It is mostly blue with a white cover. The Before Tax Cash Flow will be 86,000 per year. The machine is purchased from Retained Earnings Cash Outright. It receives an additional allowance for environmental effects of 5000/yr. The allowance is not taxed. and is not included in the 86,000 BTCF.
In 2025, the controller of Green Company discovered that 2024 depreciation expense was overstated by $40,000, a material amount. Assuming an income tax rate of 25%, the prior period adjustment to 2025 beginning retained would be:
Ayres Services acquired an asset for $96 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2021. The enacted tax rate is 25% Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income 2021 $380 24 (96) Cumulative Temporary Difference Deferred Tax Liability $308 ($ in millions) 2023 2024 2022 $400 24 (0) (0) $415 $450 24 24 (0) $424 $439 $474 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should…