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On December 31, 2019, Monty Inc. has taxable temporary differences of $2.19 million and a deferred tax liability of $613,200. These temporary differences are due to Monty having claimed CCA in excess of book depreciation in prior years. Monty’s year end is December 31. At the end of December 2020, Monty’s substantively enacted tax rate for 2020 and future years was changed to 30%.For the year ended December 31, 2020, Monty’s accounting loss before tax was $493,500. The following data are also available.1.Pension expense was $88,000 while pension plan...
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At December 31, 2019. Acme Inc. had the following deferred tax balances: Deferred tax liability Deferred tax asset Valuation allowance $ 52.500 84,000 21.000 These deferred tax balances relate to two items. First, Acme has recorded excess tax deductions related to its plant assets. At December 31, 2019 plant assets had a book value of $1,000,000 and a tax basis of $750,000 Second, Acme had a NOL carryforward in the amount of $400.000 at December 31, 2019. Acme determined the...
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Exercise 19-10
The following facts relate to Windsor Corporation.
1.
Deferred tax liability, January 1, 2017, $61,200.
2.
Deferred tax asset, January 1, 2017, $20,400.
3.
Taxable income for 2017, $107,100.
4.
Cumulative temporary difference at December 31, 2017, giving
rise to future taxable amounts, $234,600.
5.
Cumulative temporary difference at December 31, 2017, giving
rise to future deductible amounts, $96,900.
6.
Tax rate for all years, 40%. No permanent differences
exist.
7.
The company is expected to operate profitably...
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Exercise 19-5
The following facts relate to Pearl Corporation.
1.
Deferred tax liability, January 1, 2017, $45,600.
2.
Deferred tax asset, January 1, 2017, $0.
3.
Taxable income for 2017, $108,300.
4.
Pretax financial income for 2017, $228,000.
5.
Cumulative temporary difference at December 31, 2017, giving
rise to future taxable amounts, $273,600.
6.
Cumulative temporary difference at December 31, 2017, giving
rise to future deductible amounts, $39,900.
7.
Tax rate for all years, 40%.
8.
The company is expected...
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For the year ended December 31, 2020, Sweet Ltd. reported income
before income taxes of $190,500. Prior to 2020 taxable income and
accounting income was the same each year.
In 2020, Sweet Ltd. paid $123,900 for advertising; of this amount,
$41,300 was expensed in 2020. The remaining $82,600 was treated as
a prepaid expense for accounting purposes and would be expensed
equally over the 2021-2022 period. The full $123,900 was deductible
for tax purposes in 2020.
The company paid $32,500...
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Problem 19-5 (Part Level Submission) Blossom Inc. reported the following pretax income (loss) and related tax rates during the years 2013-2019. Pretax Income (loss) 2013 2014 2015 2016 2017 2018 2019 $42,400 26,300 53,600 76,900 (177,700 ) 71,100 93,200 Tax Rate 30 % 30 % 30 % 40 % 45 % 40 % 35 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Blossom began business. The tax rates from 2016-2019 were enacted...
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Riverbed Corp. reported the following differences between SFP
carrying amounts and tax bases at December 31, 2019:
Carrying Amount
Tax Base
Depreciable assets
$104,000
$70,200
Warranty liability (current liability)
18,500
0
Pension liability (long-term liability)
39,600
0
The differences between the carrying amounts and tax bases were
expected to reverse as follows:
2020
2021
After 2021
Depreciable assets
$17,000
$12,000
$4,800
Warranty liability
18,500
0
0
Accrued pension liability
12,000
11,000
16,600
Tax rates enacted at December 31, 2019 were...
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Typical Corp. reported a deferred tax liability of $3,625,000
for the year ended December 31, 2020, when the tax rate was 25%.
The deferred tax liability was related to a temporary difference of
$14,500,000 caused by an installment sale in 2020. The temporary
difference is expected to reverse in 2022 when the income deferred
from taxation will become taxable. There are no other temporary
differences. Assume a new tax law passed in 2021 and the tax rate,
which will remain...
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Concord Ltd. began business on January 1, 2019. At December 31, 2019, it had a $56,550 balance in the Deferred Tax Liability account that pertains to property, plant, and equipment acquired on July 1, 2019 at a cost of $870,000. The property, plant, and equipment is being depreciated on a straight-line basis over six years for financial reporting purposes, and is a Class 8-20% asset for tax purposes. Concord’s income before income tax for 2020 was $65,000. Concord Ltd. follows IFRS.The following items caused the...
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Concord Ltd. began business on January 1, 2019. At December 31, 2019, it had a $56,550 balance in the Deferred Tax Liability account that pertains to property, plant, and equipment acquired on July 1, 2019 at a cost of $870,000. The property, plant, and equipment is being depreciated on a straight-line basis over six years for financial reporting purposes, and is a Class 8-20% asset for tax purposes. Concord’s income before income tax for 2020 was $65,000. Concord Ltd. follows IFRS.The following items caused the...