Deferred tax asset is recognized when the taxable income (hence tax paid) in the current period is higher than the taxable income according to accrual or financial statement basis. For example in this case the taxable income of $460 million includes the rental income for 2022 which has not yet been accrued. But for tax reporting we are paying tax for this deferred income, so the extra tax we pay is an asset for the company and can be carried forward to 2022.
Income Tax Expense = ($460 -$106) x 25% = $88.5 million
Deferred Tax asset = $106 x 25% = $26.5 million
Below is the journal entry to be passed:
Income Tax Expense $88.5
Deferred Tax asset $26.5
To Income Taxes Payable $115
In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy. For financial reporting, the rent...
In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy rental property. For tax reporting, the rent is taxed when collected in 2021. The deferred portion of the rent collected in 2021 was $106 million. Taxable income is $460 million in 2021. No temporary differences existed at the beginning of the year, and the tax rate is 25%. ...
In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy rental property. For tax reporting, the rent is taxed when collected in 2021. The deferred portion of the rent collected in 2021 was $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 25%. Suppose the deferred portion of the rent collected...
In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy rental property. For tax reporting, the rent is taxed when collected in 2021. The deferred portion of the rent collected in 2021 was $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 25%. Suppose the deferred portion of the rent collected...
1. In 2021, Ryan Management collected rent revenue for 2022 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy rental property. For tax reporting, the rent is taxed when collected in 2021. The deferred portion of the rent collected in 2021 was $50 million. Taxable income is $180 million in 2021. No temporary differences existed at the beginning of the year, and the tax rate is 25%....
In 2024, Ryan Management collected rent revenue for 2025 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy rental property. For tax reporting, the rent is taxed when collected in 2024. The deferred portion of the rent collected in 2024 was $74 million. Taxable income is $300 million in 2024. No temporary differences existed at the beginning of the year, and the tax rate is 25%.Prepare the...
CHAPTER 16 (3.) In 2018, Ryan Management collected rent revenue for 2019 tenant occupancy. For financial reporting, the rent is recorded as deferred revenue and then recognized as income in the period tenants occupy rental property, but for income tax reporting it is taxed when collected. The deferred portion of the rent collected in 2018 was $65 million. Taxable income is $190 million. No temporary differences existed at the beginning of the year, and the tax rate is 40%. Suppose...
In 2021, DFS Medical Supply collected rent revenue for 2022 tenant occupancy. For Income tax reporting, the rent is taxed when collected. For financial statement reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy the rental property. The deferred portion of the rent collected In 2021 amounted to $310,000 at December 31, 2021. DFS had no temporary differences at the beginning of the year. Required: Assuming an Income tax rate of...
In 2021, DFS Medical Supply collected rent revenue for 2022 tenant occupancy. For income tax reporting, the rent is taxed when collected. For financial statement reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy the rental property. The deferred portion of the rent collected in 2021 amounted to $390,000 at December 31, 2021. DFS had no temporary differences at the beginning of the year. Required: Assuming an income tax rate of...
In 2018, DFS Medical Supply collected rent revenue for 2019 tenant occupancy. For income tax reporting, the rent is taxed when collected. For financial statement reporting, the rent is recorded as deferred revenue and then recognized as income in the period tenants occupy the rental property. The deferred portion of the rent collected in 2018 amounted to $470,000 at December 31, 2018. DFS had no temporary differences at the beginning of the year. Required: Assuming an income tax rate of...
In 2018, DFS Medical Supply collected rent revenue for 2019 tenant occupancy. For income tax reporting, the rent is taxed when collected. For financial statement reporting, the rent is recorded as deferred revenue and then recognized as income in the period tenants occupy the rental property. The deferred portion of the rent collected in 2018 amounted to $300.000 at December 31, 2018. DFS had no temporary differences at the beginning of the year. Required: Assuming an income tax rate of...