Metlock Inc's
1) Deferred tax liability at the end of 2019
Deferred tax liability on 2020 = $36,90,000/2 = $18,45,000 X $14,76,000/$36,90,000 = $738,000
Deferred tax liability on 2021 = $36,90,000/2 = $ 18,45,000 X 20% = $ 369,000
(Only half is classified as current asset, thats why divided by 2)
Deferred tax liability at the end of 2019 = $738,000+$369,000=$11,07,000
2) Journal Entry
Deferred tax expense = $14,76,000-$11,07,000 =$ 369,000
Particulars Debit Credit
Deferred tax liability $369,000
Deferred tax expense $ 369,000
3) Metlock's Inc
Income Statement (Partial) for 2019
Particulars Amount Amount
Profit before income taxes $61,50,000
Income tax expense
Current tax @40% $24,60,000 ($61,50,000 x 40%)
Adjustment for change in tax rate ($369,000) $20,91,000
Net income $40,59,000
($ 61,50,000-$20,91,000)
Exercise 19-14 Metlock Inc.'s only temporary difference at the beginning and end of 2019 is caused...
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Buffalo Inc.’s only temporary difference at the beginning and
end of 2016 is caused by a $3,300,000 deferred gain for tax
purposes for an installment sale of a plant asset, and the related
receivable (only one-half of which is classified as a current
asset) is due in equal installments in 2017 and 2018. The related
deferred tax liability at the beginning of the year is $1,320,000.
In the third quarter of 2016, a new tax rate of 34% is enacted...
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I need help finishing the income statement please!
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