Blossom Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $3550000 Estimated litigation expense 4550000 Extra depreciation for taxes (6540000) Taxable income $ 1560000 The estimated litigation expense of $4550000 will be deductible in 2021 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2180000 in each of the next 3 years. The income tax rate is 20% for all years.

Blossom Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $3550000 Estimated litigation expense 4550000 Extra depreciation for taxes (6540000) Taxable income $ 1560000 The estimated litigation expense of $4550000 will be deductible in 2021 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2180000 in each of the next 3 years. The income tax rate is 20% for all years.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 4MC: Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the...

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Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the amount of financial depreciation, resulting in a book value of the depreciable assets of 24,500 for financial reporting purposes and of 20,000 for tax purposes at the end of 2019. In addition, Shadrach recognized a 3,500 estimated liability for legal expenses in the financial statements during 2019; it expects to pay this liability (and deduct it for tax purposes) in 2023. The current tax rate is 30%, no change in the tax rate has been enacted, and the company expects to be profitable in future years. What is the amount of the net deferred tax liability at the end of 2019? a. 300 b. 450 c. 1,050 d. 1,350
Comprehensive Colt Company reports pretax financial income of 143,000 in 2019. In addition to pretax income from continuing operations (of which revenues are 295,000), the following items are included in this pretax income: Colts taxable income totals 93,000 in 2019. The difference between the pretax financial income and the taxable income is due to the excess of tax depreciation over financial depreciation on assets used in continuing operations. At the beginning of 2019, Colt had a retained earnings balance of 310.000 and a deferred tax liability of 8,100. During 2019, Colt declared and paid dividends of 48,000. It is subject to tax rates of 15% on the first 50,000 of income and 30% on income in excess of 50,000. Based on proper interperiod tax allocation procedures, Colt has determined that its 2019 ending deferred tax liability is 14,100. Required: 1. Prepare a schedule for Colt to allocate the total 2019 income tax expense to the various components of pretax income. 2. Prepare Colts income tax journal entry at the end of 2019. 3. Prepare Colts 2019 income statement. 4. Prepare Colts 2019 statement of retained earnings. 5. Show the related income tax disclosures on Colts December 31, 2019, balance sheet.
Sheridan Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $2615000 Estimated litigation expense 3615000 Extra depreciation for taxes (5622000) Taxable income $ 608000 The estimated litigation expense of $3615000 will be deductible in 2021 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $1874000 in each of the next 3 years. The income tax rate is 20% for all years.Income taxes payable is $121600. $401400. $601400. $0.
Sunland Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $3330000 Estimated litigation expense 4330000 Extra depreciation for taxes (6324000) Taxable income $ 1336000 The estimated litigation expense of $4330000 will be deductible in 2021 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2108000 in each of the next 3 years. The income tax rate is 20% for all years.Income taxes payable is $598800 $398800 0 $267200 I believe it is $267,200 but that answer seems to easy to be right
Oriole Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $3165000 Estimated litigation expense 4165000 Extra depreciation for taxes (6162000) Taxable income $ 1168000 The estimated litigation expense of $4165000 will be deductible in 2021 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $2054000 in each of the next 3 years. The income tax rate is 20% for all years.The deferred tax asset to be recognized is
30. Wildhorse Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $1470000 Estimated litigation expense 3450000 Installment sales (2760000) Taxable income $2160000 The estimated litigation expense of $3450000 will be deductible in 2022 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1380000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1380000 current and $1380000 noncurrent. The income tax rate is 20% for all years.The deferred tax asset to be recognized is $0. $138000 noncurrent. $690000 noncurrent. $138000 current.
Crane Co. at the end of 2020, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income Estimated litigation expense Installment sales Taxable income $1170000 $1180000. $352000. $234000. $590000. 2950000 (2360000) $1760000 The estimated litigation expense of $2950000 will be deductible in 2022 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1180000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1180000 current and $1180000 noncurrent. The income tax rate is 20% for all years. The income tax expense is
Pole Co. at the end of 2018, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Use of the depreciable assets will result in taxable amounts of €350,000 in each of the next three years. The estimated litigation expenses of €840,000 will be deductible in 2021 when settlement is expected. Instructions a) Prepare the journal entry to record income tax expense, deferred taxes, and income taxes payable for 2018, assuming a tax rate of 40% for all years
Pole Co. at the end of 2018, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Use of the depreciable assets will result in taxable amounts of €350,000 in each of the next three years. The estimated litigation expenses of €840,000 will be deductible in 2021 when settlement is expected. Instructions a. Prepare a schedule of future taxable and deductible amounts
Subject :- Account At the end of 2024, its first year of operations, Blossom Company prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $2,890,000 Estimated litigation expense 3890000 Extra depreciation for taxes (5892000) Taxable income $888,000 The estimated litigation expense of $3890000 will be deductible in 2025 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $1964000 in each of the next 3 years. The income tax rate is 20% for all years. The deferred tax asset at the end of 2024 to be recognized is
Caramel Company at the end of 2022, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income- 3,000,000 Estimated litigation expense- 4,000,000 Excess tax depreciation- (6,000,000) Taxable Income- 1,000,000 The estimated litigation expense of 4,000,000 will be deductible in 2023 when it is expected to be paid. Th edepreciable assets will result in deductible amounts of 2,000,000 in each of the next three years. The income tax rate is 20% for all years. The amount of deferred tax liability to be recognized for 2022 is
Caramel Co. at the end of 2022, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income- $3,000,000 Estimated litigation expense- 4,000,000 Excess tax depreciation- (6,000,000) Taxable Income- $1,000,000 The estimated litigation expense of $4,000,000 will be deductible in 2023 when it is expected to be paid. The depreciable assets will result in deductible amounts of $2,000,000 in each of the next three years. The income tax rate is 20% for all years. The deferred tax asset to be recognized for 2022 is