Question

Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: ($ in thousands) Situation 1 2 3 $120 $252 $268 16 20 1 16 16 $368 20 64 Taxable income Future deductible amounts Future taxable amounts Balance(s) at beginning of the year: Deferred tax asset Deferred tax liability The enacted tax rate is 25% Required: For each situation, determine the following: (Enter your answers in thousands rounded to one decimal place (i.e. 1,200 should be entered as 1.2). Negative amounts should be indicated by a minus sign. Leave no cell blank, enter "0" wherever applicable.) Situation Situation 2 1 3 4 a. Income tax payable currently b. Deferred tax asset-ending balance. c. Deferred tax asset-change. d. Deferred tax liability—ending balance. e. Deferred tax liability—change. f. Income tax expense.

Answer 1

Part A

	Situation
	1	2	3	4
Taxable income	120	252	268	368
Tax rate	25%	25%	25%	25%
Income tax payable	30	63	67	92

Part B

	Situation
	1	2	3	4
Future deductible amounts	(16)		(20)	(20)
Tax rate	25%	25%	25%	25%
Deferred tax asset - bal.	(4)	0	(5)	(5)

Part C

	Situation
	1	2	3	4
Deferred tax asset - bal.	(4)	0	(5)	(5)
Beginning of the year	2	0	18	4
Deferred tax asset: (dr) cr	(2)	0	(13)	(1)

Part D

	Situation
	1	2	3	4
Future taxable amounts	0	16	16	64
Tax rate	25%	25%	25%	25%
Deferred tax liability - bal.	0	4	4	16

Part E

	Situation
	1	2	3	4
Deferred tax liability - bal.	0	4	4	16
Beginning of the year	0	8	12	0
Deferred tax liability: (dr) cr	0	(12)	(8)	16

Part F

	Situation
	1	2	3	4
Income tax payable currently	30	63	67	92
Deferred tax asset: (dr) cr	(2)	0	(13)	(1)
Deferred tax liability: (dr) cr	0	(12)	(8)	16
Income tax expense	28	51	46	107