Zekany Corporation would have had identical income before taxes on both its income tax returns and incomestatements for the years 2021 through 2024 except for differences in depreciation on an operational asset. The assetcost $110,000 and is depreciated for income tax purposes in the following amounts:2021$36,3002022 48,4002023 16,5002024 8,800The operational asset has a four-year life and no residual value. The straight-line method is used for financial reportingpurposes.Income amounts before depreciation expense and income taxes for each of the four years were as follows:2021202220232024Accounting income before taxesand depreciation$70,000 $90,000 $80,000 $80,000Assume the income tax rate for 2021 and 2022 was 30%; however, during 2022, tax legislation was passed to raise thetax rate to 40% beginning in 2023. The 40% rate remained in effect through the years 2023 and 2024. Both theaccounting 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 atransaction/event, select "No journal entry required" in the first account field.) 1 Record 2021 income taxes.2 Record 2022 income taxes.3 Record 2023 income taxes.4 Record 2024 income taxes.

Introduction Income tax: Income tax is paid by companies on the net income earned before tax in…

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 $110,000 and is depreciated for income tax purposes in the following amounts: 2021$36,300 2022 48,400 2023 16,500 2024 8,800 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 2022 2023 2024 Accounting income before taxes $70,000 $90,000 $80,000 $80,000 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 required" in the first account field.)

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 $110,000 and is depreciated for income tax purposes in the following amounts: 2021$36,300 2022 48,400 2023 16,500 2024 8,800 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 2022 2023 2024 Accounting income before taxes $70,000 $90,000 $80,000 $80,000 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 required" in the first account field.)

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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Ivanhoe Corporation has a deferred tax asset at December 31, 2026 of $210000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 30% for 2023-2025; 25% for 2026; and 20% for 2027 and thereafter. Assuming that management expects that only 50% of the related benefits will be realized, a valuation account should be established in the amount of O $36750. O $31500. O $105000. O $42000. of
Doug Smith Industries purchased warehouses for $121 million (no residual value) at the beginning of 2021. The warehouses were being de year life using the sum-of-the-years'-digits method. At the beginning of 2024, management decided to change to straight-line. Ignoring tax entry will include a debit to depreciation expense of: Note: Round your answer to 2 decimal places. 3:20 Multiple Choice $12.10 million. $8.80 million. $61.60 million. $59.40 million.
In 2025, Sandhill Company discovered an error while preparing its 2025 financial statements. A building constructed at the beginning of 2024 costing $1299900 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Sandhill properly included depreciation on its tax return also using straight-line depreciation. Income tax payable was also reported correctly at a tax rate of 20%. Income before depreciation expense in 2025 was $400000. What was the impact on the following accounts at the start of 2025? Accumulated Depreciation was understated by $86660 and Retained Earnings was overstated by $34664. O Accumulated Depreciation was understated by $43330 and Retained Earnings was overstated by $34664. O Accumulated Depreciation was overstated by $43330 and net income was understated by $43330. O Accumulated Depreciation was understated by $43330 and net income was overstated by $43330.
Purple Ltd purchased a depreciable asset for $900,000 on 1 July 2014. For accounting purposes, it is estimated to have a useful life of 8 years with no residual value. For taxation purposes, the useful life is 6 years with no residual value. The asset is depreciated on a straight-line basis for both accounting and tax purposes. Tax rate is 30%. What is the adjustment required in the deferred tax liability account for the year ended 30 June 2020 and 30 June 2021 respectively in accordance with the requirements of AASB112 Income Taxes? $11,250; $11,250 $11,250; $33,750 $11,250; ($33,750) $11,250; ($11,250)
At the end of 2020, Payne Industries had a deferred tax asset account with a balance of $125 million attributable to a temporary book-tax difference of $500 million in a liability for estimated expenses. At the end of 2021, the temporary difference is $384 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2021 is $900 million and the tax rate is 25%. Required:1. Prepare the journal entry(s) to record Payne’s income taxes for 2021, assuming it is more likely than not that the deferred tax asset will be realized.2. Prepare the journal entry(s) to record Payne’s income taxes for 2021, assuming it is more likely than not that only one-fourth of the deferred tax asset ultimately will be realized.
Pronghorn 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 Credit
n 20X6, CICO has unrecognized tax losses of $500, 000. In 20X7, the company has additional losses of $100, 000. However, the assessment is that $250, 000 of losses will probably be realized in the future. The current tax rate is 30% and the enacted rate of 20X8 is 28%. What is the entry required in 20X7. Multiple Choice a) Dr. Deferred tax asset $30, 000; Cr. Income tax expense (recovery) $30, 000 b) Dr. Deferred tax asset $70, 000; Cr. Income tax expense (recovery) $70, 000 c) Dr. Deferred tax asset $77, 000; Cr. Income tax expense (recovery) $77, 000 d) Dr. Deferred tax asset $70, 000; Cr. Retained earnings $70, 000
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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.
s) In 2022, Demeter, Inc. reported depreciation expense of $1,279,000 and depreciation for tax purposes of $1,534,800. This was the only temporary difference between GAAP and tax and it will reverse equally over the next three years. Assume that the enacted income tax rates are 25% for 2022, 25% for 2023 and 30% for 2024 and 2025. What will Demeter, Inc. report as a deferred tax liability on its 2022 balance sheet? ( 5) $63.950 $51.160 $72.477 O $76,740
Several years ago, Western Electric Corp. purchased equipment for $20 million. Western uses straight-line depreciation for financial reporting and accelerated depreciation for tax purposes. At Dec. 31, 2020 the carrying value of the equipment was $18 million and its tax basis was $15 million. At Dec.31, 2021 the carrying value of the equipment was $16 million and the tax basis was $11 million. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $25 million. A tax rate of 25% applies to all years. Required: Prepare one journal entry to record Western's income tax expense for the current year. Show well-labeled computations for the income tax payable and the change in the deferred tax account.
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