The information that follows pertains to Richards Refrigeration, Inc.:
($ in millions) | |||||||||||
Book Value | Tax Basis |
Future Taxable (Deductible) Amount |
|||||||||
Buildings and equipment (net of accumulated depreciation) | $ | 158 | $ | 109 | $ | 49 | |||||
Prepaid insurance | 69 | 0 | 69 | ||||||||
Liability—loss contingency | 44 | 0 | (44 | ) | |||||||
Required:
1. Complete the following table given below and
prepare the appropriate journal entry to record income taxes for
2021.
2. What is the 2021 net income?
|
Journal entry worksheet
|
Solution:
Particulars | Amount (In millions) | Rate of Tax | Tax (In millions) | Recorded as |
Pretax accounting income | $219.00 | |||
Permanent difference | $0.00 | |||
Income subject to taxation | $219.00 | 25% | $54.75 | Income tax expense |
Temporary differences: | ||||
Depreciation | -$49.00 | 25% | -$12.25 | Deferred tax liability |
Prepaid insurance | -$69.00 | 25% | -$17.25 | Deferred tax liability |
Liability - Loss contigency | $44.00 | 25% | $11.00 | Deferred tax assets |
Income taxable in current year | $145.00 | 25% | $36.25 | Income Tax Payable |
Journal Entries | |||
Date | Particulars | Debit (In million) | Credit (In million) |
31-Dec-21 | Income tax expense Dr | $54.75 | |
Deferred tax assets Dr | $11.00 | ||
To Income taxes payable | $36.25 | ||
To Deferred tax liability | $29.50 | ||
(To record income tax expense) |
The information that follows pertains to Richards Refrigeration, Inc.: At December 31, 2021, temporary differences existed...
The information that follows pertains to Richards Refrigeration, Inc.: a. At December 31, 2018, temporary differences existed between the financial statement carrying amounts and the tax bases of the following: Carrying Amount $158 ($ in millions) Future Taxable Tax (Deductible) Basis Amount $189 $ 49 Ask Buildings and equipment (net of accumulated depreciation) Prepaid insurance Liability-loss contingency (44) ences b. No temporary differences existed at the beginning of 2018. c. Pretax accounting income was $219 million and taxable income was...
The information that follows pertains to Richards Refrigeration, Inc.: At December 31, 2018, temporary differences existed between the financial statement carrying amounts and the tax bases of the following: ($ in millions) Carrying Amount Tax Basis Future Taxable (Deductible) Amount Buildings and equipment (net of accumulated depreciation) $ 132 $ 96 $ 36 Prepaid insurance 56 0 56 Liability—loss contingency 31 0 (31 ) No temporary differences existed at the beginning of 2018. Pretax accounting income was $206 million and...
The information that follows pertains to Richards Refrigeration, Inc.: At December 31, 2018, temporary differences existed between the financial statement carrying amounts and the tax bases of the following: ($ in millions) Carrying Amount Tax Basis Future Taxable (Deductible) Amount Buildings and equipment (net of accumulated depreciation) $ 120 $ 90 $ 30 Prepaid insurance 50 0 50 Liability—loss contingency 25 0 (25 ) No temporary differences existed at the beginning of 2018. Pretax accounting income was $200 million and...
The information that follows pertains to Richards Refrigeration, Inc.: a. At December 31, 2018, temporary differences existed between the financial statement carrying amounts and the tax bases of the following: ($ in millions) Future Taxable Carrying Tax (Deductible) Amount Basis Amount $ 148 $ 104 $ 44 64 39 (39) Buildings and equipment (net of accumulated depreciation) Prepaid insurance Liability-loss contingency 64 b. No temporary differences existed at the beginning of 2018. c. Pretax accounting income was $214 million and...
The information that follows pertains to Richards Refrigeration, Inc.: a. At December 31, 2021, temporary differences existed between the financial statement book values and the tax bases of the following: (s in millions) Future Taxable Tax (Deductible) Basis Amount $90 $ 30 50 B (25) Book Value $120 50 25 Buildings and equipment (net of accumulated depreciation) Prepaid insurance Liability-loss contingency b. No temporary differences existed at the beginning of 2021. c. Pretax accounting Income was $200 million and taxable...
The information that follows pertains to Richards Refrigeration, Inc.: a. At December 31, 2018, temporary differences existed between the financial statement carrying amounts and the tax bases of the following: (S in millions) Future Taxable Carrying Amount $136 (Deductible) Тах Вавів Amount Buildings and equipment (net of accumulated depreciation) Prepaid insur ance Liability-loss contingency $98 0 $38 58 58 0 (33) 33 b. No temporary differences existed at the beginning of 2018. c. Pretax accounting income was $208 million and...
The information that follows pertains to Richards Refrigeration, Inc.: a. At December 31, 2018, temporary differences existed between the financial statement carrying amounts and the tax bases of the following: $ in Carrying Tax Amount Basis $134 $97 illions) Future Taxable Deductible) Amount $ 37 Buildings and equipment (net of accumulated depreciation) Prepaid insurance Liability-loss contingency (32) b. No temporary differences existed at the beginning of 2018 c. Pretax accounting income was $207 million and taxable income was $145 million...
The information that follows pertains to Richards Refrigeration, Inc.: a. At December 31, 2018, temporary differences existed between the financial statement carrying amounts and the tax bases of the following: ( in millions ) Future Taxable (Deductible) Carrying Таx Basis Amount $47 Amount Buildings and equipment (net of accumu lated depreciation) Prepaid insurance Liability-loss contingency $154 $107 67 67 (42) 42 b. No temporary differences existed at the beginning of 2018. c. Pretax accounting income was $217 million and taxable...
The information that follows pertains to Esther Food Products: a. At December 31, 2021, temporary differences were associated with the following future taxable (deductible) amounts: Depreciation $ 42,000 Prepaid expenses 16,000 Warranty expenses (14,000) b. No temporary differences existed at the beginning of 2021. c. Pretax accounting income was $58,000 and taxable income was $14,000 for the year ended December 31, 2021. d. The tax rate is 25%. Required: Complete the following table given below and prepare the appropriate journal...
The information that follows pertains to Esther Food Products: a. At December 31, 2018, temporary differences were associated with the following future taxable (deductible) amounts: Depreciation Prepaid expenses Warranty expenses $ 58,000 25,000 (7,000) b. No temporary differences existed at the beginning of 2018. C. Pretax accounting income was $98,000 and taxable income was $22,000 for the year ended December 31, 2018. d. The tax rate is 40%. Required: Complete the following table given below and prepare the appropriate journal...