a niv On January 1, year 1 $1,000,000 was collected in advance for rental of a building The entire $1,000,000 was reported as taxable income for the year. The enacted tax rate is 44%. The enacted tax rate for all future years was 46%. As the result of a change in the enacted tax rate for years all years after year 3 is 45%. Make the journal entry to record in

a niv On January 1, year 1 $1,000,000 was collected in advance for rental of a building The entire $1,000,000 was reported as taxable income for the year. The enacted tax rate is 44%. The enacted tax rate for all future years was 46%. As the result of a change in the enacted tax rate for years all years after year 3 is 45%. Make the journal entry to record in

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter11: The Corporate Income Tax

Section: Chapter Questions

Problem 10P

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In the current year, Madison Corporation had 50,000 of taxable income at a tax rate of 25%. During the year, Madison began offering warranties on its products and has a Warranty liability for financial reporting purposes of 5,000 at the end of the year. Warranty expenses are not deductible until paid for income tax purposes. Prepare the journal entry to record Madisons income taxes at the end of the year.
How do the all events and economic performance requirements apply to the following transactions by an accrual basis taxpayer? a. The company guarantees its products for six months. At the end of 2019, customers had made valid claims for 600,000 that were not paid until 2020. Also, the company estimates that another 400,000 in claims from 2019 sales will be filed and paid in 2020. b. The accrual basis taxpayer reported 200,000 in corporate taxable income for 2019. The state income tax rate was 6%. The corporation paid 7,000 in estimated state income taxes in 2019 and paid 2,000 on 2018 state income taxes when it filed its 2018 state income tax return in March 2019. The company filed its 2019 state income tax return in March 2020 and paid the remaining 5,000 of its 2019 state income tax liability. c. An employee was involved in an accident while making a sales call. The company paid the injured victim 15,000 in 2019 and agreed to pay the victim 15,000 a year for the next nine years.
Burnham Company collected rent of $3,800 during Year 1. For income tax reporting, the rent is taxed when collected. For financial reporting, the rent is recognized as income in the period earned. At the end of Year 1, the unearned portion of the rent collected during the year amounted to $440. Burnham had no temporary differences at the beginning of the current year. Assume an income tax rate of 30%. What is the amount of the deferred tax asset that should be recognized at the end of Year 1? deferred tax asset
UMPI’s end of year pretax financial income for 2018 was $720,000. Included in it was $40,000 in interest income on municipal bonds, warranty expense accrued for $15,000, a $25,000 fine for dumping hazardous waste, and depreciation of $40,000. Depreciation for tax purposes was $65,000. Their tax rate was 21%. Instructions: 10.1 Compute the taxable income for 2018. 10.2 Compute the deferred taxes at December 31, 2018 that relate to the temporary differences described above. 10.3 Prepare the journal entries to record income tax expense, deferred taxes, and income taxes payable for 2018. 10.4 Format the income tax expense section of the income statement, starting with “income before income taxes”.
For the current year, LNS corporation reported the following taxable income at the end of its first, second, and third quarters. Quarter-End First Second Third Installment What are LNS's minimum first-, second-, third-, and fourth-quarter estimated tax payments, using the annualized income method? Note: Enter all amounts as positive values. Leave no answer blank. Enter zero if applicable. Round "Annualization Factor" for Fourth quarter to 7 places. Round other intermediate computations and final answers to the nearest whole dollar amount. First quarter Second quarter Third quarter Fourth Cumulative quarter Taxable Income $ 1,700,000 2,636,000 3,681,000 Taxable Income $ 1,700,000 $ 1,700,000 $ 2,636,000 $ 3,681,000 Annualization Factor 4 $ 4 $ 2 S $ 1.3333333 Annual Estimated Taxable Income 6,800,000 6,800,000 5,272,000 4,908,000 Answer is not complete. Tax on estimated taxable income $ 6,800,000 $ 6,800,000 $5,272,000 $ 4,895,730 Percentage of Tax Required To Be Paid 25 50 75 100 %0 %…
At the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of a liability account for estimated expenses and its tax base. Taxable income is $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 35%. Required: a. Prepare the journal entry(s) to record income taxes during the period. b.How much will income tax expense be shown in the income statement? c. What will be the balance sheet disclosure during the period regarding taxes?
At the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of a liability account for estimated expenses and its tax base. Taxable income is $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 35%. Required: a. Prepare the journal entry(s) to record income taxes during the period. b.How much will income tax expense be shown in the income statement? c.
Madhu Corp. receives rent in advance of $100,000 in Year 1. The timing difference is expected to reverse $40,000 in Year 3 and $60,000 in Year 4. The enacted tax rates are 30% in Year 1 and Year 2. In Year 2, the tax laws are changed, and the new enacted tax rate for Year 3 and thereafter is 40 % . Which of the following entries would be included in the journal entry to adjust the deferred tax account at December 31, Year 2?
For the current year, LNS corporation reported the following taxable income at the end of its first, second, and third quarters. Quarter-End First Second Third Installment Cumulative Taxable Income $1,000,000 1,600,000 2,400,000 What are LNS's minimum first, second, third, and fourth quarter estimated tax payments determined using the annualized income method? (Enter all amounts as positive values. Leave no answer blank. Enter zero if applicable. Round "Annualization Factor" for Fourth quarter to 7 places. Round other intermediate computations and final answers to the nearest whole dollar amount.) First quarter Second quarter Third quarter Fourth quarter Taxable Annualization Income Factor $ 1,000,000 1,000,000 1,600,000 2,400,000 Annual Est. Taxable Income $4,000,000 4 $4,000,000 2 $3,200,000 1.3300000 $3,192,000 Answer is complete but not entirely correct. Tax on Estimated Taxable Income 4 $ 1,360,000 1,360,000 1,088,000 1,088,000 $ $ X Percentage of Tax Required to be Paid 25 % 50 %…
On December 31, for GAAP purposes, Clubs Inc. reported a balance of $56,000 in Prepaid Maintenance Expense for services to be received over the following year. For tax purposes, however, prepaid costs are deducted when paid. Taxable income is $184,000 and the tax rate is 25%. Assume no other temporary differences or any beginning balances in deferred tax accounts. Required a. Record the income tax journal entry on December 31. •Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Date Account Name Dec. 31 Income Tax Expense N/A Income Tax Payable Deferred Tax Liability To record income tax expense Dr. Cr. 60,000 0 0 0 0 46,000 ▼ 0 14,000 b. Prepare the income tax section of the income statement for the year and provide the disclosure of current and deferred tax expense. •Note: Do not use negative signs with your answers. Partial Income Statement For the year ended December 31 Income…
For the current year, LNS corporation reported the following taxable income at the end of its first, second, and third quarters. Quarter-End First Second Third What are LNS's minimum first-, second-, third-, and fourth-quarter estimated tax payments, using the annualized income method? Note: Enter all amounts as positive values. Leave no answer blank. Enter zero if applicable. Round "Annualization Factor" for Fourth quarter to 7 places. Round other intermediate computations and final answers to the nearest whole dollar amount. Installment First quarter Second quarter Cumulative Taxable Income $ 1,000,000 1,600,000 2,400,000 Third quarter Fourth quarter Taxable Income Annualization Factor Annual Estimated Taxable Income $ $ $ $ 0 0 0 0 Tax on Estimated Taxable Income Percentage of Tax Required to be Paid Required Cumulative Payment % $ |% $ % $ % $ 0 0 0 0 Prior Cumulative Payments Required Estimated Tax Payment
ABC Company prepares financial statements under IFRS. At December 13, Year 4, ABC's income for financial (book) purposes equaled P100,000 and ABC's only temporary difference related to depreciation. For financial (book) purposes, depreciation equaled P10,000 and for tax purposes, depreciation equaled P15,000. The difference is expected to reverse evenly over the next two years. The enacted tax rate for the current year, Year 4, is 30% and the enacted tax rate for all future years is 40%. In its year-end balance sheet, what amount should ABC reports as a deferred tax asset (liability)? 2,000 deferred tax asset 1,500 deferred tax asset 2,000 deferred tax liability 1,500 deferred tax liability