The correct answer is listed at the bottom. Can someone please explain how to get this answer?
Homework Answers
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| Grayton Corporation | |||||
| Deferred tax asset of $ 30,000 is calculated below: | |||||
| Nature | Amount $ | Remarks | Tax rate | Deferred Tax $ | |
| Estimated legal expense | 200,000.00 | It will create deferred tax asset. | 30% | 60,000.00 | Deferred Tax Asset |
| Reason | |||||
| Tax provisions says that only expense paid in cash are to be recognized. Provision and estimations are not applicable. So it will be added back to net income. Income will increase and tax payable will be more. But deferred tax asset will be created for same amount and will be adjusted in the books when the expense is actually paid. | |||||
| Excess of tax over book depreciation | 100,000.00 | It will create deferred tax liability. | 30% | 30,000.00 | Deferred Tax Liability |
| Reason | |||||
| Depreciation is more as per tax than book so income under tax provision is less by $ 100,000. So less tax will be paid this time. It is a temporary effect and deferred tax liability will be created for same amount and will be adjusted in the books in coming years. | |||||
| Net Deferred tax asset to be reported | 30,000.00 |
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The correct answer is listed at the bottom. Can someone please
explain how to get this...
Use the following information to answer Questions 7 through 9 Thimphu Company prepared the follow...
Use the following information to answer Questions 7 through 9 Thimphu Company prepared the following reconciliation between pretax financial accounting income and taxable income for the year ending December 31, 20X0, its first year of operations. Pretax Financial Accounting Income Estimated Litigation Expense Installment Sales Gross Profit Taxable Income 200,000 500,000 400,000) 300,000 The estimated litigation expense of $500,000 will be deductible in 20X2 when it is expected to be paid. The gross profit from the installment sales Will be...
15. Which of the following statements is correct? a. All current deferred tax liabilities and assets...
15. Which of the following statements is correct? a. All current deferred tax liabilities and assets shall be offset and presented as a single amount on the balance sheet. b. Deferred tax assets related to carryforwards shall be classified as current or noncurrent on the balance sheet based on their expected date of reversal. c. All current and noncurrent deferred taxes shall be offset and presented as a single amount on the balance sheet. d. Deferred tax liabilities and assets...
The following information relates to Franklin Freightways for its first year of operations (data in millions...
The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars): $299 Pretax accounting income: Pretax accounting income included: Overweight fines (not deductible for tax purposes) Depreciation expense Depreciation in the tax return 5 80 160 The applicable tax rate is 25%. There are no other temporary or permanent differences. Franklin's balance sheet at the end of its first year would report: Multiple Choice A deferred tax liability of $20 million among noncurrent...
E19-17B (Two Temporary Differences, Tracked through 3 Years, Multiple Rates) Taxable income and pretax financial income...
E19-17B (Two Temporary Differences, Tracked through 3 Years, Multiple Rates) Taxable income and pretax financial income would be identical for Ursula Co. except for its depreciation on equipment pur- chased in 2014 for $500,000 and estimated costs of warranties. The following income computations have been prepared. Taxable income 2014 2015 2016 Excess of revenues over expenses (excluding two temporary differences) Tax Depreciation Expenditures for warranties Taxable income $265,000 (125,000) (10,000) $ 130,000 $ 630,000 (200,000) (50,000) $ 380,000 $ 250,000...
Use the information below to answer the question above. Can someone help me with this question, please? I know the ans...
Use the information below to answer the question above.
Can someone help me with this question, please? I know the
answer is C but im confused as to why. I know municipal interest is
non-taxable so it is a 5000 permanent difference but why is the
temporary difference 0? I thought it would be an 18000 temporary
difference but based on the answer key I was wrong. Can someone
explain it to me? please help and thank you in advance!...
Fill-in choices are add: or less: Problem 3-34 (LO. 2) Relix, Inc., is a domestic corporation...
Fill-in choices are add: or less:
Problem 3-34 (LO. 2) 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 8,000 750,000 750,000 Buildings Accumulated depreciation Furniture and fixtures Accumulated depreciation Total assets (450,000) 70,000 (46,000) (380,000) 70,000 (38,000) $332,500 $410,500 Liabilities Accrued litigation expense...
Relix, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year...
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)...
Exercise 17-27 (0.6) Prance, Inc., ears pretax book net income of $800,000 in 2018. Prance acquires...
Exercise 17-27 (0.6) Prance, Inc., ears pretax book net income of $800,000 in 2018. Prance acquires a depreciable asset that year, and first-year tax depreciation exceeds book depreciation by $80,000. Prance reported no other temporary or permanent book-tax differences. The relevant U.S. Federal corporate income tax rate is 21% and Prance earns an after-tax rate of return on capital of 8%. Compute the following for Prance, Inc. a. Current income tax expense b. Deferred income tax expense Total income tax...
Information for Kent Corp. for the year 2016: Reconciliation of pretax accounting income and taxable income:...
Information for Kent Corp. for the year 2016: Reconciliation of pretax accounting income and taxable income: Pretax accounting income $180,900 Permanent differences (15,500) 165,400 Temporary difference-depreciation (12,900) Taxable income $152,500 Cumulative future taxable amounts all from depreciation temporary differences: As of December 31, 2015 $13,400 As of December 31, 2016 $26,300 The enacted tax rate was 30% for 2015 and thereafter. What should be the balance in Kent's deferred tax liability account as of December 31, 2016? $5,360. $7,890. $26,300....
Prance, Inc., earns pretax book net income of $1,141,000 in 2019. Prance acquires a depreciable asset...
Prance, Inc., earns pretax book net income of $1,141,000 in 2019. Prance acquires a depreciable asset that year, and first-year tax depreciation exceeds book depreciation by $114,100. Prance reported no other temporary or permanent book-tax differences. The pertinent U.S. Federal corporate income tax rate is 21%, and Prance earns an after-tax rate of return on capital of 8%. Enter below the Prance's 2019 deferred tax expense and any deferred tax asset or liability. If required, round your answer to nearest...
Use the following information to answer Questions 7 through 9 Thimphu Company prepared the following reconciliation between pretax financial accounting income and taxable income for the year ending December 31, 20X0, its first year of operations. Pretax Financial Accounting Income Estimated Litigation Expense Installment Sales Gross Profit Taxable Income 200,000 500,000 400,000) 300,000 The estimated litigation expense of $500,000 will be deductible in 20X2 when it is expected to be paid. The gross profit from the installment sales Will be...
The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars): $299 Pretax accounting income: Pretax accounting income included: Overweight fines (not deductible for tax purposes) Depreciation expense Depreciation in the tax return 5 80 160 The applicable tax rate is 25%. There are no other temporary or permanent differences. Franklin's balance sheet at the end of its first year would report: Multiple Choice A deferred tax liability of $20 million among noncurrent...
E19-17B (Two Temporary Differences, Tracked through 3 Years, Multiple Rates) Taxable income and pretax financial income would be identical for Ursula Co. except for its depreciation on equipment pur- chased in 2014 for $500,000 and estimated costs of warranties. The following income computations have been prepared. Taxable income 2014 2015 2016 Excess of revenues over expenses (excluding two temporary differences) Tax Depreciation Expenditures for warranties Taxable income $265,000 (125,000) (10,000) $ 130,000 $ 630,000 (200,000) (50,000) $ 380,000 $ 250,000...
Use the information below to answer the question above.
Can someone help me with this question, please? I know the
answer is C but im confused as to why. I know municipal interest is
non-taxable so it is a 5000 permanent difference but why is the
temporary difference 0? I thought it would be an 18000 temporary
difference but based on the answer key I was wrong. Can someone
explain it to me? please help and thank you in advance!...
Fill-in choices are add: or less:
Problem 3-34 (LO. 2) 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 8,000 750,000 750,000 Buildings Accumulated depreciation Furniture and fixtures Accumulated depreciation Total assets (450,000) 70,000 (46,000) (380,000) 70,000 (38,000) $332,500 $410,500 Liabilities Accrued litigation expense...
Exercise 17-27 (0.6) Prance, Inc., ears pretax book net income of $800,000 in 2018. Prance acquires a depreciable asset that year, and first-year tax depreciation exceeds book depreciation by $80,000. Prance reported no other temporary or permanent book-tax differences. The relevant U.S. Federal corporate income tax rate is 21% and Prance earns an after-tax rate of return on capital of 8%. Compute the following for Prance, Inc. a. Current income tax expense b. Deferred income tax expense Total income tax...
Prance, Inc., earns pretax book net income of $1,141,000 in 2019. Prance acquires a depreciable asset that year, and first-year tax depreciation exceeds book depreciation by $114,100. Prance reported no other temporary or permanent book-tax differences. The pertinent U.S. Federal corporate income tax rate is 21%, and Prance earns an after-tax rate of return on capital of 8%. Enter below the Prance's 2019 deferred tax expense and any deferred tax asset or liability. If required, round your answer to nearest...
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