Question

Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: 17 1 2 $37,000 $77,000 SITUATION Taxable income Amounts at year-end: Future deductible amounts Future taxable amounts Balances at beginning of year, dr (cr): Deferred tax asset Deferred tax liability 4,700 11,300 @ 4,700 $ 1,200 $ 4,52€ 1 ,eee The enacted tax rate is 40% for both situations. Required: For each situation determine the: SITUATION (a) Income tax payable currently (b) Deferred tax asset-balance at year-end (c) Deferred tax asset change dr or (Cr) for the year. (d) Deferred tax liability - balance at year end. (e.) Deferred tax liability change dr or (cr) for the year (f) Income tax expense for the year.

Answer 1

Ang.com situation situation 2). Taxable income 37,000 771000 Tax Rate 404 40 $14,800 $30,800 income Tax payable currently ferture Deductible Amount 4,700 111300 Tax Rate 404 401 $45.00 1000 4,500 0 4.700 b. Deferred faxasset-balance at year end +$1280 Delenred Tax o set. beginning balance · change in taloud Tax assets. Dr. CC1) 1880 future Taxable Amount Tax Rate - d. Deleaned tax liability-balare al year end : #0 Defined Hay limbikaty beginning balance +_$0 le. Debersed-fax liability changed.onced) fryou 401 61 880) (1000) 6880) $0

1 (30,800) income Tax_fayable (141800) changean Delened Tax assets. Drico). 880 change in Dekened fax tability disco). locom__lax. Expense for the year..$13.990 (880) 1$31,680) f