Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 17, Problem 17.5BE
Permanent Differences, Reconciliation of Statutory Tax Rate to Effective Tax Rate. Simmox Company s income before taxes is $290,000, and its tax rate is 35% Note that $40,000 is nontaxable interest income from its investment m municipal bonds and is included in the $290,000. There are no other book-tax differences Prepare a reconciliation of Simmox's statutory tax rate to its effective tax rate.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Reconciling between Effective and Statutory Tax Rates
Baltimore Inc. reported pretax GAAP income of $72,000 in 2020. In analyzing differences between GAAP income and taxable income, the company determined that it had deducted $9,000 in
nondeductible fines and added $5,040 in tax-exempt municipal interest revenue to GAAP income. The statutory tax rate is 25%.
Prepare a reconciliation between Baltimore Inc.'s effective and statutory tax rates.
• Note: Round percentage to one decimal place (for example, enter 3.4 for 3.35%).
Percentage
Statutory tax rate
0 %
Tax-exempt income
0 %
Non-deductible expense
0 %
Effective taxX rate
0 %
Two independent situations are described below. Each involves future deductible amounts and/or future taxable
amounts produced by temporary differences:
SITUATION
Taxable income
Amounts at year-end:
Future deductible amounts
Future taxable amounts
Balances at beginning of year:
Deferred tax asset
Deferred tax liability
1
2
$100,000 $130,000
0
10,000
0
2,000
The enacted tax rate is 25% for both situations.
10,000
15,000
$2,000
0
Required:
For each situation determine the:
(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.
Meman
Chapter 17 Solutions
Intermediate Accounting (2nd Edition)
Ch. 17 - Prob. 17.1QCh. 17 - When will income tax expense and income taxes...Ch. 17 - Will permanent differences cause the effective tax...Ch. 17 - When do permanent differences arise?Ch. 17 - How are deferred tax assets and deferred tax...Ch. 17 - Prob. 17.6QCh. 17 - Prob. 17.7QCh. 17 - Prob. 17.8QCh. 17 - Prob. 17.9QCh. 17 - How does a firm determine the need for a valuation...
Ch. 17 - Prob. 17.11QCh. 17 - Prob. 17.12QCh. 17 - Prob. 17.13QCh. 17 - How does an entity account for uncertain tax...Ch. 17 - Prob. 17.15QCh. 17 - Prob. 17.16QCh. 17 - Do U.S. GAAP and IFRS classify deferred tax...Ch. 17 - Prob. 17.18QCh. 17 - Cavan Company prepared the following...Ch. 17 - Prob. 17.2MCCh. 17 - Prob. 17.3MCCh. 17 - Prob. 17.4MCCh. 17 - Prob. 17.5MCCh. 17 - Prob. 17.6MCCh. 17 - Prob. 17.7MCCh. 17 - Prob. 17.1BECh. 17 - Income Taxes Payable. Limmox Company has...Ch. 17 - Permanent Differences. Simmox Company's income...Ch. 17 - Permanent Differences. Plimmox Company's income...Ch. 17 - Permanent Differences, Reconciliation of Statutory...Ch. 17 - Prob. 17.6BECh. 17 - Prob. 17.7BECh. 17 - Prob. 17.8BECh. 17 - Prob. 17.9BECh. 17 - Prob. 17.10BECh. 17 - Temporary Differences, Deferred Tax Liability....Ch. 17 - Temporary Differences. Deferred Tax Asset....Ch. 17 - Temporary Differences, Deferred Tax Asset. Using...Ch. 17 - Prob. 17.14BECh. 17 - Realizability of Deferred Assets. Maves, Inc....Ch. 17 - Prob. 17.16BECh. 17 - Change in Tax Rates. Finer Shoes Company recorded...Ch. 17 - Change in Tax Rates, IFRS. Use the same...Ch. 17 - Prob. 17.19BECh. 17 - Prob. 17.20BECh. 17 - Prob. 17.21BECh. 17 - Prob. 17.22BECh. 17 - Prob. 17.23BECh. 17 - Prob. 17.24BECh. 17 - Prob. 17.25BECh. 17 - Prob. 17.1ECh. 17 - Prob. 17.2ECh. 17 - Prob. 17.3ECh. 17 - Prob. 17.4ECh. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Prob. 17.7ECh. 17 - Prob. 17.8ECh. 17 - Change in Tax Rates, Permanent Difference,...Ch. 17 - Prob. 17.10ECh. 17 - Prob. 17.11ECh. 17 - Net Operating Loss, Carryback. Phlash Photo Labs,...Ch. 17 - Net Operating Loss, Carryforward. Loggins Lumber...Ch. 17 - Prob. 17.14ECh. 17 - Prob. 17.15ECh. 17 - Net Operating Loss, Carryforward, Tax Rate Change....Ch. 17 - Prob. 17.17ECh. 17 - Prob. 17.18ECh. 17 - Uncertain Tax Positions. Lewis Eagle Corporation...Ch. 17 - Uncertain Tax Positions. Based on the information...Ch. 17 - Prob. 17.1PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Temporary Differences, Deferred Tax Liabilities....Ch. 17 - Prob. 17.4PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.6PCh. 17 - Net Operating Loss, Carryback, Carryforward,...Ch. 17 - Prob. 17.8PCh. 17 - Net Operating Loss, Carryback. Carryforward. CPF...Ch. 17 - Prob. 17.10PCh. 17 - Prob. 17.11PCh. 17 - Prob. 17.12PCh. 17 - Permanent Differences, Temporary Tax Differences,...Ch. 17 - Prob. 1JCCh. 17 - Prob. 2JCCh. 17 - Prob. 1FSCCh. 17 - Prob. 1SSCCh. 17 - Prob. 2SSCCh. 17 - Prob. 3SSCCh. 17 - Scene 1: The concept of the deferred tax liability...Ch. 17 - Basis for Conclusions Case 2: Uncertain Tax...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Nalad Corp. provided the following data related to accounting and taxable income: Pre-tax accounting income (financial statements) Taxable income (tax return) Income tax rate 20X8 $530,000 20X9 $505,000 305,000 730,000 38% 38% There are no existing temporary differences other than those reflected in these data. There are no permanent differences. Required: 1-a. How much tax expense would be reported in each year if the taxes payable method was used? Tax Expense 20X8 20X9 1-b. What is the implied tax rate? (Round your answers to 1 decimal place.) 20X8 20X9 Implied tax rate 96 % 2-a. How much tax expense would be reported using comprehensive tax allocation (liability method). Tax Expense 20X8 20X9 2-b. How much deferred income tax would be reported using comprehensive tax allocation (liability method).arrow_forwardFour independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: ($ in thousands) Situation 1 2 3 4 Taxable income $108 $240 $244 $332 Future deductible amounts 16 20 20 Future taxable amounts 16 16 52 Balance (s) at beginning of the year: Deferred tax asset 2 15 4 Deferred tax liability 8 The enacted tax rate is 25%. Required: For each situation, determine the following: (Enter your answers in thousands rounded to one decimal place (i.e. 1,200 should be entered as 1.2). Negative amounts should be indicated by a minus sign. Leave no cell blank, enter "O" wherever applicable.) Situation 1 2 3 a. Income tax payable currently. b. Deferred tax asset-ending balance. c. Deferred tax asset-change. d. Deferred tax liability-ending balance. e. Deferred tax liability-change. f. Income tax expense.arrow_forwardNalad Corp. provided the following data related to accounting and taxable income: 20X8 20X9 Pre-tax accounting income (financial statements) Taxable income (tax return) $510,000 295,000 40% $495,000 710,000 40% Income tax rate There are no existing temporary differences other than those reflected in these data. There are no permanent differences. Required: 1-a. How much tax expense would be reported in each year if the taxes payable method was used? Tax Expense 20X8 20X9 1-b. What is the implied tax rate? (Round your answers to 1 decimal place.) 20X8 20X9 Implied tax ratearrow_forward
- Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: ($ in thousands) Situation 1 2 3 4 Taxable income $ 116 $ 248 $ 260 $ 356 Future deductible amounts 16 20 20 Future taxable amounts 16 16 60 Balance(s) at beginning of the year: Deferred tax asset 2 17 4 Deferred tax liability 8 2 The enacted tax rate is 25%. Required: For each situation, determine the following: Note: Enter your answers in thousands rounded to one decimal place (i.e. 1,200 should be entered as 1.2). Negative amounts should be indicated by a minus sign. Leave no cell blank, enter "0" wherever applicable.arrow_forwardPlease don't give image formatarrow_forwardThe tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows ($ thousands): Year 3 $18,851 (1,245) $17,606 (32,639) ($15,033) lower. higher. the same. Year 2 $16,917 (1,360) $15,557 Deferred tax assets Valuation allowance Net deferred tax assets Deferred tax liabilities Net deferred tax liability Compared to the provision for income taxes in Year 3, the company's cash tax payments were: (39,040) ($23,483)arrow_forward
- Nonearrow_forward39 Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: SITUATION Taxable income Amounts at year-end: Future deductible amounts Future taxable amounts Balances at beginning of year, debit (credit): Deferred tax asset Deferred tax liability The enacted tax rate is 40% for both situations. Required: For each situation determine the following: (a) Income tax payable currently. (b) Deferred tax asset - balance at year-end. (c) Deferred tax asset change debit or (credit) for the year. (d) Deferred tax liability - balance at year-end. (e) Deferred tax liability change debit or (credit) for the year. (f) Income tax expense for the year. 1 2 $ 39,000 $ 79,000 4,900 0 11,100 4,900 $ 1,000 0 $ 4,440 1,000 SITUATION 2arrow_forwardDo not give image formatarrow_forward
- Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: Taxable income Future deductible amounts Future taxable amounts Balance(s) at beginning of the year: Deferred tax asset Deferred tax liability ($ in thousands) Situation 1 2 3 $92 $224 $212 $284 16 20 20 16 16 36 2 11 4 8 2 The enacted tax rate is 25%. Required: For each situation, determine the following: (Enter your answers in thousands rounded to one decimal place (i.e. 1,200 should be entered as 1.2). Negative amounts should be indicated by a minus sign. Leave no cell blank, enter "0" wherever applicable.) Show Transcribed Text a. Income tax payable currently. b. Deferred tax asset-balance. c. Deferred tax asset-change. d. Deferred tax liability-balance. e. Deferred tax liability-change. f. Income tax expense. 2 J Situation 2 3arrow_forwardRecording Multiple Temporary Differences, Multiple Tax Rates On December 31, Colgait Inc. had an installment sale receivable balance of $180,000 recognized on its financial statements, while the amount was not recognized for tax purposes. Colgait Inc. also had a warranty accrual of $40,000 on December 31 that is not deductible for tax purposes. The installment receivable will be settled equally over the next three years. The warranty will be settled equally over the next two years. Taxable income for the current year was $1,000,000. Enacted tax rates are 25% for the current and next year, and 30% for years thereafter. Required a. Prepare schedules to compute the deferred tax balances on December 31. •Note: Do not use negative signs with your answers. Accounts receivable Reversal of difference between GAAP and tax bases $ Tax rate Deferred tax liability, ending balance Year 2 Year 3 Year 4 Total 180,000 $ 0 $ 0 $ 180,000 $ 25% 45,000 $ 30% 30% 0 $ 0 $ 45,000 Warranty liability Year 2…arrow_forwardSubject: accountingarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Understanding U.S. Taxes; Author: Bechtel International Center/Stanford University;https://www.youtube.com/watch?v=QFrw0y08Oto;License: Standard Youtube License