Question

The following facts relate to Shamrock Corporation. 1. Deferred tax liability, January 1, 2017, $40,800. 2. Deferred tax asset, January 1, 2017, $0. 3. Taxable income for 2017, $96,900. 4. Pretax financial income for 2017, $204,000. 5. Cumulative temporary difference at December 31, 2017, giving rise to future taxable amounts, $244,800. 6. Cumulative temporary difference at December 31, 2017, giving rise to future deductible amounts, $35,700. 7. Tax rate for all years, 40%. 8. The company is expected to operate profitably in the future. Compute income taxes payable for 2017. (Round answer to the nearest dollar amount, e.g. $1,525.) Income taxes payable

Answer 1

ANSWER

As per the given question,

Temporary difference giving rise to future taxable amounts	142800		=244800-(40800/40%)
Temporary difference giving rise to future deductible amounts	35700
1
Income taxes payable	38760		=96900*40%
2
	Debit	Credit
Income tax expense	81600
Deferred Tax asset	14280		=35700*40%
Income Tax payable		38760
Deferred Tax liability		57120	=142800*40%
3
Income Statement (Partial)
For the year ended December 31,2017
Income before income taxes		204000
Income tax expense:
Deferred	42840		=57120-14280
Current	38760
		81600
Net income/(loss)		122400

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