1 | $16.8 million | |||||
It represents the largest amount of benefit that is cumulative probability more than 50 percent likely to be the end result | ||||||
Amount of the tax benefit that management expects to sustain | $28.0 | $22.4 | $16.8 | $11.2 | $5.6 | |
Percentage likelihood that the tax position will be sustained at this level | 10% | 20% | 25% | 20% | 25% | |
Cumulative probability that the tax position will be sustained | 10% | 30% | 55% | 75% | 100% | |
2 | ||||||
Event | General Journal | Debit | Credit | |||
Income tax expense ($103 x 40% - $16.8) | $24.4 | |||||
Income tax payable | $13.2 | |||||
Liability—Potential additional tax ($28 - $16.8) | $11.2 | |||||
Exercise 16-29 Tax credit; uncertainty regarding sustainability (LO16-9) Delta Catfish Company has taken a position in...
E 16-29 Tax credit; uncertainty regarding sustainability LO16-9 L Delta Catfish Company has taken a position in its tax return to claim a tax credit of $10 million (direct reduction in taxes payable) and has determined that its sustainability is "more likely than not," based on its technical merits. Delta has developed the probability table shown below of all possible material outcomes (S in millions) Probability Table Amount of the tax benefit that management expects to receive Percentage likelihood that...
Delta Catfish Company has taken a position in its tax return to claim a tax credit of $10 million (direct reduction in taxes payable) and has determined that its sustainability is “more likely than not,” based on its technical merits. Delta has developed the probability table shown below of all possible material outcomes: Probability Table ($ in millions) Amount of the tax benefit that management expects to receive $ 10 $ 8 $ 6 $ 4 $ 2 Percentage likelihood...
Delta Catfish Company has taken a position in its tax return to claim a tax credit of $26 million (direct reduction in taxes payable) and has determined that its sustainability is “more likely than not,” based on its technical merits. Delta has developed the probability table shown below of all possible material outcomes: Probability Table ($ in millions) Amount of the tax benefit that management expects to receive $ 26 $ 20.8 $ 15.6 $ 10.4 $ 5.2 Percentage likelihood...
Check my work Delta Catfish Company has taken a position in its tax return to claim a tax credit of $30 million (direct reduction in taxes payable) and has determined that its sustainability is "more likely than not," based on its technical merits. Delta has developed the probability table shown below of all possible material outcomes: $30 $24.0 $18.0 $12.0 10& 20& 25% 208 Delta's taxable income is $105 million for the year. Its effective tax rate is 40%. The...
Problem 16-6 Multiple differences; temporary difference yet to originate; multiple tax rates [LO16-5, 16- You are the new accounting manager at the Barry Transport Company. Your CFO has asked you to provide input on the company's Income tax position based on the following: 1. Pretax accounting Income was $30 million and taxable income was $8 million for the year ended December 31, 2018. 2. The difference was due to three items: a. Tax depreciation exceeds book depreciation by $20 million...
Exercise 16-13 Multiple differences; calculate taxable income [LO16-1, 16-4, 16-6] Southern Atlantic Distributors began operations in January 2018 and purchased a delivery truck for $100,000. Southern Atlantic plans to use straight-line depreciation over a four-year expected useful life for financial reporting purposes. For tax purposes, the deduction is 50% of cost in 2018, 30% in 2019, and 20% in 2020. Pretax accounting income for 2018 was $500,000, which includes interest revenue of $50,000 from municipal bonds. The enacted tax rate...
At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $38 million attributable to a temporary book-tax difference of $95 million in a liability for estimated expenses. At the end of 2018, the temporary difference is $90 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2018 is $190 million and the tax rate is 40%. Required: 1. Prepare the journal entry(s) to...
Fores construction company reported a pretax operating loss of $240 million for financial reporting purposes in 2018. Contributing to the loss were (a) a penalty of $15 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2018 and (b) an estimated loss of $20 million form accruing a loss contingency. The loss will be tax deductible when paid in 2019. The enacted tax rate is 40%. There were no temporary differences at the...
At the end of 2017, Payne Industries had a deferred tax asset account with a balance of $32 million attributable to a temporary book- tax difference of $80 million in a liability for estimated expenses. At the end of 2018, the temporary difference is $60 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2018 is $175 million and the tax rate is 40%. Required: 1. Prepare the journal entry(s)...
Bronson Industries reported a deferred tax liability of $10.4 million for the year ended December 31, 2017, related to a temporary difference of $26 million. The tax rate was 40%. The temporary difference is expected to reverse in 2019 at which time the deferred tax liability will become payable. There are no other temporary differences in 2017-2019. Assume a new tax law is enacted in 2018 that causes the tax rate to change from 40% to 30% beginning in 2019....