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:
Required:
1. Determine the amounts necessary to record
income taxes for 2018 and prepare the appropriate journal
entry.
2. Assume the enacted federal income tax law
specifies that the tax rate will change from 40% to 35% in 2020.
When scheduling the reversal of the depreciation difference, you
were uncertain as to how to deal with the fact that the difference
will continue to originate in 2019 before reversing the next two
years. Upon consulting PricewaterhouseCoopers' Comperio
database, you found:
.441 Depreciable and amortizable
assets
Only the reversals of the temporary difference at the balance
sheet date would be scheduled. Future originations are not
considered in determining the reversal pattern of temporary
differences for depreciable assets. FAS 109 [FASB ASC 740–Income
Taxes] is silent as to how the balance sheet date temporary
differences are deemed to reverse, but the FIFO pattern is
intended.
You interpret that to mean that, when future taxable amounts are
being scheduled, and a portion of a temporary difference has yet to
originate, only the reversals of the temporary difference at the
balance sheet date can be scheduled and multiplied by the tax rate
that will be in effect when the difference reverses. Future
originations (like the depreciation difference the second year) are
not considered when determining the timing of the reversal. For the
existing temporary difference, it is assumed that the difference
will reverse the first year the difference begins reversing.
Determine the amounts necessary to record income taxes for 2018 and
prepare the appropriate journal entry.
You are the new accounting manager at the Barry Transport Company. Your CFO has asked you...
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 $60 million and taxable income was $16 million for the year ended December 31, 2021. 2. The difference was due to three items: a. Tax depreciation exceeds book depreciation by $40 million in 2021 for the business complex acquired that year. This amount is scheduled to...
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: Pretax accounting income was $60 million and taxable income was $16 million for the year ended December 31, 2021. The difference was due to three items: Tax depreciation exceeds book depreciation by $40 million in 2021 for the business complex acquired that year. This amount is scheduled to be $60 million...
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 $45 million and taxable income was $8 million for the year ended December 31, 2021. 2. The difference was due to three items: a. Tax depreciation exceeds book depreciation by $30 million in 2021 for the business complex acquired that year. This amount is scheduled to...
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: Pretax accounting income was $60 million and taxable income was $16 million for the year ended December 31, 2021. The difference was due to three items: Tax depreciation exceeds book depreciation by $40 million in 2021 for the business complex acquired that year. This amount is scheduled to be $60 million...
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: Pretax accounting income was $70 million and taxable income was $4 million for the year ended December 31, 2021. The difference was due to three items: Tax depreciation exceeds book depreciation by $60 million in 2021 for the business complex acquired that year. This amount is scheduled to be $80 million...
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...
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 $50 million and taxable income was $6 million for the year ended December 31, 2013. 2.The difference was due to three items: a. Tax depreciation exceeds book depreciation by $40 million in 2013 for the business complex acquired that year. This amount is scheduled to be...
You assumed the role of accounting manager at Big Fish Industries. Your CFO has asked you to provide input on the company's income tax position based on the following: 1. Pretax accounting income was $61 million for the year ended December 31, 2018, $75 million for the year ended December 31, 2019, and $52 million for the year ended December 31, 2020. 2. The differences between pretax income and taxable income relate to the following items: a. Tax depreciation exceeds...
1. Pretax accounting income was $41 million for the year ended December 31, 2018. 2. Tax depreciation exceeds book depreciation by $30 million in 2018 for the business complex acquired that year. This amount is scheduled to be $60 million in 2019 and to reverse as ($50 million) and ($40 million) in 2020 and 2021, respectively. 3. Insurance of $9 million was paid in 2018 for 2019 coverage....
Question 4 --/1 View Policies Current Attempt in Progress At December 31, 2019, Novak Company had a net deferred tax liability of $354,500. An explanation of the items that compose this balance is as follows. Resulting Balances in Deferred Taxes Temporary Differences 1. Excess of tax depreciation over book depreciation $205,600 Accrual, for book purposes, of estimated loss contingency from pending lawsuit that is expected to be settled in 2020. The loss will be deducted on the tax return when...