Novak SpA reports pretax financial income of €74,100 for 2022. The following items cause taxable income to be different than pretax financial income. 1. 2. Depreciation on the tax return is greater than depreciation on the income statement by €15,800. Rent collected on the tax return is greater than rent revenue reported on the income statement by €23,200. 3. Fines for pollution appear as an expense of €11,000 on the income statement. Novak's tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2022. (a) (b) Your Answer Correct Answer (Used) Your answer is correct. Compute taxable income and income taxes payable for 2022. Taxable income € 92500 Income taxes payable € 27750 Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Prepare the income tax expense section of the income statement for 2020, beginning with the line "Income before income taxes." (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Novak Company Income Statement (Partial) $ $ Compute the effective income tax rate for 2020. (Round answer to 1 decimal places, e.g. 25.5%.) Effective income tax rate %
Novak SpA reports pretax financial income of €74,100 for 2022. The following items cause taxable income to be different than pretax financial income. 1. 2. Depreciation on the tax return is greater than depreciation on the income statement by €15,800. Rent collected on the tax return is greater than rent revenue reported on the income statement by €23,200. 3. Fines for pollution appear as an expense of €11,000 on the income statement. Novak's tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2022. (a) (b) Your Answer Correct Answer (Used) Your answer is correct. Compute taxable income and income taxes payable for 2022. Taxable income € 92500 Income taxes payable € 27750 Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Prepare the income tax expense section of the income statement for 2020, beginning with the line "Income before income taxes." (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Novak Company Income Statement (Partial) $ $ Compute the effective income tax rate for 2020. (Round answer to 1 decimal places, e.g. 25.5%.) Effective income tax rate %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Novak SpA reports pretax financial income of €74,100 for 2022. The following items cause taxable income to
be different than pretax financial income.
1.
2.
Depreciation on the tax return is greater than depreciation on the income statement by €15,800.
Rent collected on the tax return is greater than rent revenue reported on the income statement by
€23,200.
3.
Fines for pollution appear as an expense of €11,000 on the income statement.
Novak's tax rate is 30% for all years, and the company expects to report taxable income in all future years.
There are no deferred taxes at the beginning of 2022.
(a)
(b)
Your Answer
Correct Answer (Used)
Your answer is correct.
Compute taxable income and income taxes payable for 2022.
Taxable income
€
92500
Income taxes payable
€
27750
Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes
payable for 2022. (Credit account titles are automatically indented when amount is entered. Do
not indent manually. If no entry is required, select "No Entry" for the account titles and enter O
for the amounts.)
Account Titles and Explanation
Debit
Credit
Prepare the income tax expense section of the income statement for 2020, beginning with the line "Income before income
taxes." (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Novak Company
Income Statement (Partial)
$
$
Compute the effective income tax rate for 2020. (Round answer to 1 decimal places, e.g. 25.5%.)
Effective income tax rate
%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education