Deferred Tax Assets and Liabilities | ||
Current Year End | ||
Particulars | Timing Diff amount | Deferred Tax Amount (Timing difference * 21%) (federal tax rate) |
Deferred Tax Assets (Created for temporary differences for which there will be future tax saving) | ||
(a) Provision for Bad debts (50-20) | 30 | 6.3 |
(it is a temporary difference as it is allowed in tax if they become actual bad debts) | ||
(30* 21%)- federal tax rate | ||
(b) Warrany expenses (50-25) | 25 | 5.25 |
(same as above) | ||
(25*21%) | ||
Total Deferred Tax Asset- I | 11.55 | |
Deferred Tax Liabilities (Created for temporary differences for which there will be future tax liability) | ||
(a) on Installment Sales | 700 | -147 |
(this will be taxable when payment received, hence liable to pay tax in future, so deferred tax liability) | ||
(b) Depreciation | ||
Claiming more depreciation in tax now will result in higher tax in future- hence Deferred Tax liability to be created | 45 | -9.45 |
Total Deferred Tax Liability- II | -156.45 | |
Net Deferred Tax (Liability) or Asset (I+II) | -144.90 |
Book/Tax Differences Temporary Permanent Difference Reason Book 4,800 1,000 20 5,820 Sales Installment sales Interest Income...
How is total federal tax provision calculated and effective tax rate calculated? Pre-Tax Net Income 1,915 1,335 425 Federal Income tax expense NOL carryforward from PY NET INCOME 75 (75) (75) 1,490 1,260 21% 265 Federal Tax Rate Federal Income Tax Liability Total temporary differences Deferred tax Asset/Liability Total Federal Tax provision (765) 161 Effective Tax Rate
At the end of 2018, Smith Corporation had no book-tax differences and no deferred income tax assets or deferred income tax liabilities. During the year 2019, two book-tax differences occurred. One was a $10,000 permanent difference that caused taxable income to be larger than financial income. The other was a $110,000 temporary difference that caused taxable income to be smaller than financial income. That $110,000 temporary difference will reverse over the years 2020 and 2021, causing future taxable amounts of...
Relix, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year before recording any net deferred tax asset or net deferred tax liability. Tax Debit/(Credit) Book Debit/(Credit) Assets Cash $500 $500 Accounts receivable 8,000 8,000 Buildings 750,000 750,000 Accumulated depreciation (450,000) (380,000) Furniture and fixtures 70,000 70,000 Accumulated depreciation (46,000) (38,000) Total assets $332,500 $410,500 Liabilities Accrued litigation expense $0 ($50,000) Note payable (78,000) (78,000) Total liabilities ($78,000) ($128,000)...
Shaw Corporation reported pretax book income of $1,260,000. Included in the computation were favorable temporary differences of $425,000, unfavorable temporary differences of $309,000, and favorable permanent differences of $193,000. Compute the company's deferred income tax expense or benefit. Deferred income tax expense
Smith Company reported pretax book income of $407,000. Included in the computation were favorable temporary differences of $51,400, unfavorable temporary differences of $20,700, and favorable permanent differences of $40,700. Smith's deferred income tax expense or benefit would be: Multiple Choice Net deferred tax expense of $6,447. Net deferred tax benefit of $6,447. O o oo Net deferred tax expense of $15,141. Net deferred tax benefit of $15,141.
Shaw Corporation reported pretax book income of $1,920,000. Included in the computation were favorable temporary differences of $230,000, unfavorable temporary differences of $221,000, and favorable permanent differences of $115,000. Compute the company's deferred income tax expense or benefit. X Answer is complete but not entirely correct. Deferred income tax expense 3,060
Yount Inc.'s auditors prepared the following reconciliation between book and taxable income. Yount's tax rate is 21 percent. Net income before tax Permanent book/tax differences Temporary book/tax differences Taxable income $ 378, 200 (33,500) 112,400 $ 457,100 a. Compute Yount's tax expense for financial statement purposes. b. Compute Yount's tax payable. C. Compute the net increase in Yount's deferred tax assets or deferred tax liabilities (identify which) for the year.
Current Attempt in ProgressOn December 31, 2019, Monty Inc. has taxable temporary differences of $2.19 million and a deferred tax liability of $613,200. These temporary differences are due to Monty having claimed CCA in excess of book depreciation in prior years. Monty’s year end is December 31. At the end of December 2020, Monty’s substantively enacted tax rate for 2020 and future years was changed to 30%.For the year ended December 31, 2020, Monty’s accounting loss before tax was $493,500. The following data are also available.1.Pension expense was...
At the end of year 6, the tax effects of temporary differences reported in Turtle company's year-end financial statements were as follows: Deferred Tax Assets (Liabilities)Accelerated tax depreciation ($120,000)Warranty expense 80,000NOL carryforward 200,000Total$ 160,000 A valuation allowance was not considered necessary. Turtle anticipates that $40,000 of the deferred tax liability will reverse in year 7, that actual warranty costs will be incurred evenly in year 8 and year 9, and that the NOL carryforward will be used in year 7. On...
Woodward Corporation reported pretax book income of $1,432,500. Included in the computation were favorable temporary differences of $412,500, unfavorable temporary differences of $50,250, and favorable permanent differences of $146,000. Compute the company's current income tax expense or benefit. (Round your final answers to nearest whole dollar amount. Amounts to be deducted should be indicated by a minus sign.) Answer is not complete. Pretax book income Favorable temporary differences Unfavorable temporary differences Favorable permanent differences Taxable income Tax rate Current income...