Question

Problem 3-40 (LO. 2)

Kantner, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 21% Federal corporate tax rate and no valuation allowance.

Tax Debit/(Credit) Book Debit/(Credit) Assets Cash $1,000 $1,000 Accounts receivable 9,000 9,000 Buildings 850,000 850,000 Accumulated depreciation (700,000) (620,000) Furniture and fixtures 40,000 40,000 Accumulated depreciation (10,000) (8,000) Total assets $190,000 $272,000 Liabilities Accrued warranty expense $0 ($40,000) Note payable (16,000) (16,000) Total liabilities ($16,000) ($56,000) Stockholders' Equity Paid-in capital ($50,000) ($50,000) Retained earnings (124,000) (166,000) Total liabilities and stockholders' equity ($190,000) ($272,000)

The beginning of the year book-tax basis difference for the deferred tax liabilities are listed below. Complete the table and determine the change in Kantner's deferred tax liabilities for the current year.

Beginning of Year Current-Year Difference End of Year Building—accumulated depreciation ($62,000) $ $ Furniture and fixtures— accumulated depreciation (400) $ $ Subtotal ($62,400) $ $ Applicable tax rate 21% 21% 21% Gross deferred tax liability ($13,104) $ Change in deferred tax liability $

Answer 1

Pgno Answer:- Accumlated depreciation - Tax Debit - Book Debit (Difference) (700,000)-(620,000) -(80,000) i Accumlated depreciation - 180,000) coifference) Accumlated depreciation Furniture & Fixtures difference · Tax Debit – Book Debit = = (10,000) -- (8,000) - (2000) change in deferred tax liability current year difference = [(80,000) – (62,000) + (6000) – (400)]xal), = [[3000)+(600)] * al.%. ; (19600) Xa1.1, (4116)

Beginning of Year current year Difference PONO @ End of year Building Accumulated depreciation (62000) ($ 18,000) $80,000) Furniture and Fixtures accumulated depreciation (400) ($1600) ($2000) Subtotal ($62,400) ($19600) ($82,000) 21.7. Qlil. Applicable tax rate 21.4. Gross deferred tax liability ($13,104) ($13,220) change in deffered . tax liability ( $4116)