Bestlook Company provided the following information for its first year of operati December 31, 2019 in connection with the preparation of it income tax return: Accounting income Nondeductible expenses Nontaxable revenue P8,000,000 400,000 600,000 Deferred income on installment sales included in 900,000 200,000 600,000 700,000 financial income but taxable in 2020 Doubtful accounts recorded Financial depreciation Tax depreciation Estimated warranty cost accrued in 2019 but not deductible for tax purposes until paid Income tax rate (current and future) a. How much is the current tax expense? b. How much is the deferred tax asset? c. How much is the deferred tax liability? d. How much is the total tax expense? 200,000 35%
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- Comprehensive Colt Company reports pretax financial income of 143,000 in 2019. In addition to pretax income from continuing operations (of which revenues are 295,000), the following items are included in this pretax income: Colts taxable income totals 93,000 in 2019. The difference between the pretax financial income and the taxable income is due to the excess of tax depreciation over financial depreciation on assets used in continuing operations. At the beginning of 2019, Colt had a retained earnings balance of 310.000 and a deferred tax liability of 8,100. During 2019, Colt declared and paid dividends of 48,000. It is subject to tax rates of 15% on the first 50,000 of income and 30% on income in excess of 50,000. Based on proper interperiod tax allocation procedures, Colt has determined that its 2019 ending deferred tax liability is 14,100. Required: 1. Prepare a schedule for Colt to allocate the total 2019 income tax expense to the various components of pretax income. 2. Prepare Colts income tax journal entry at the end of 2019. 3. Prepare Colts 2019 income statement. 4. Prepare Colts 2019 statement of retained earnings. 5. Show the related income tax disclosures on Colts December 31, 2019, balance sheet.Interperiod Tax Allocation Peterson Company has computed its pretax financial income to be 66,000 in 2019 after including the effects of the appropriate items from the following information: Petersons accountant has prepared the following schedule showing the future taxable and deductible amounts at the end of 2019 for its three temporary differences: At the beginning of 2019, Peterson had a deferred tax liability of 12,540 related to the depreciation difference and 4,710 related to the accrual-basis sales difference. In addition, it had a deferred tax asset of 14,850 related to the warranty difference. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. Required: 1. Compute Petersons taxable income for 2019. 2. Prepare Petersons income tax journal entry for 2019 (assume no valuation allowance is necessary). 3. Next Level Identify the permanent differences in Items 1 through and explain why you did or did not account for them as deferred tax items in Requirement 2.Intraperiod Tax Allocation Wright Company reports the following information for the year ended December 31, 2019: Required: 1. Prepare the year-end journal entry necessary to record the 2019 intraperiod income tax allocation in regard to the preceding information. 2. Prepare Wrights 2019 income statement and statement of retained earnings.
- On 1, 2020, the tax asset Complex of P12,800,000 for P18,300,00 for The income recognized on 31, 2019 in at which The tax was to a of P500,000 The for the tax rent of P6,000,000 on 1, entire is tax Pro Problem 16-13 (IFRS) Complex Company reported pretax accounting inco P6,2 tax rate is 30%. Incl P450,000 and no deferred tax liability. The deferred tax asset was due to a provision of P500. Th of The other reason for the deferred tax asset was res, P1,000,000 collected in 2019 but earned only in 2020 time it was tax deductible. ta: Life insurance premiums of P200,000 were recognized o year on key officers for 2020 and 2021. ye The entity paid for a two-year casualty insurance for P6,000,000 on January 1, 2020. The entire premium is to deductible when paid. The entity collected rent from leasing some of its equipment The rent is recognized as revenue when earned but taxahla when collected. 2020 2021 3,300,000 2,500,000 Rent collected 3,500,000 3,300,000 Rent earned The entity had trading…XYZ Co. at the end of 2018, its first year of operations, prepared a reconciliation betweenpretax financial income and taxable income as follows:Pretax financial income € 750,000Estimated expenses deductible for taxes when paid 1,200,000Extra depreciation (1,350,000)Taxable income € 600,000Estimated warranty expense of €800,000 will be deductible in 2019, €300,000 in 2020, and€100,000 in 2021. The use of the depreciable assets will result in taxable amounts of €450,000in each of the next three years.Instructions(a) Prepare a table of future taxable and deductible amounts.(b) Prepare the journal entry to record income tax expense, deferred income taxes, andincome taxes payable for 2018, assuming an income tax rate of 40% for all years.Balance Sheet Presentation Thiel Company reports the following deferred tax items at the end of 2019: Deferred TaxItem # AccountBalance Related Asset or LiabilityCreating the Deferred Tax Item 1 $6,700 debit Current asset 2 7,200 credit Current liability 3 10,600 debit Noncurrent asset 4 15,500 credit Noncurrent liability Required: Show how the preceding deferred tax items are reported on Thiel's December 31, 2019, balance sheet. THIEL COMPANYBalance Sheet (Tax Items)December 31, 2019 Noncurrent Liabilities Deferred Tax asset or liability $
- Current Attempt in Progress Sheridan Inc. reports the following pretax income Doss) for both financial reporting purposes and tax purposes. Year 2018 2019 2020 2021 The tax rates listed were all enacted by the beginning of 2018. (c) Prepare the journal entries for the years 2018-2021 to record income tax expense (benefit) and income taxes payable (refundable) and the tax effects of the loss carryforward, assuming that at the end of 2020 the benefits of the loss carryforward are judged more likely than not to be realized in the future. (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 for the amounts) 2018 Pretax Income (Loss) $128.000 96.000 (214.000) 310.000 2019 Date Account Titles and Explanation 2020 2021 Tax Rate 17 % 17% 19 % 19 % List of Accounts Safor Later Debit Credit Attempts:0 of 4 used Sub (b) The parts of this question must be completed in order. This…PROBLEM 1 Xavier Company provided the following information for its first year of operations ended December 31, 2021 in connection with the preparation of its income tax return:Taxable income P 4,000,000Non-deductible expenses 200,000Non-taxable revenue 300,000Deferred income on installment saleincluded in financial income but taxable in 2022 450,000Doubtful accounts recorded 100,000Financial depreciation 300,000Tax depreciation 350,000Estimated warranty cost accrued in2021 but not deductible for tax purposes until paid…Compute ROA and adjusted ROA CSX Corporation reported the following in its tax footnote to its 2019 financial statements. Use this information to answer the requirements. $ millions 2019 2018 2017 Net income $3,331 $3,309 $5,471 Interest expense, net 737 639 546 Average total assets 37,493 36,234 35,577 Compute (a) return on assets and (b) the adjusted return on assets for each of the three years. Assume a statutory tax rate of 37% for 2017 and 22% for 2018 and 2019. a. Compute return on assets (ROA) for 2017, 2018, and 2019 Note: 1. Select the appropriate numerator and denominator used to compute ROA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute ROA for each year. Year Numerator Denominator ROA AnswerNet incomeNet income (adjusted)Interest expense, netAverage total assetsAverage total equity AnswerNet incomeNet income (adjusted)Interest expense, netAverage total assetsAverage total equity 2017 Answer…
- The following information was extracted from the records of Jackson Ltd as at 30 June 2020.Asset (liability)Accounts receivableMotor vehiclesProvision for warrantyDeposits received in advanceCarrying amount$150 000165 000(12 000)(15 000)Tax base$175 000125 00000The depreciation rates for accounting and taxation are 15% p.a. and 25% p.a. respectively. Depositsare taxable when received, and warranty costs are deductible when paid. An allowance for doubtfuldebts of $25 000 has been raised against accounts receivable for accounting purposes, but such debtsare deductible only when written off as uncollectable.Required1. Calculate the temporary differences for Jackson Ltd as at 30 June 2020. Justify yourclassification of each difference as either a deductible temporary difference or a taxabletemporary difference.2. Prepare a deferred tax worksheet and the journal entry to record deferred tax for the yearended 30 June 2020 assuming no deferred items had been raised in prior years.Wilcox Company has prepared the following reconciliation of its pretax financial income with its taxable income for 2019: Pretax financial income $3,000 Add: Estimated expense on 1-year warranties recognized for financial reporting in excess of actual warranty costs deducted for income taxes 100 Less: MACRS depreciation deducted for income taxes in excess of depreciation recognized for financial reporting (150) Taxable income $2,950 At the beginning of 2019, Wilcox had a deferred tax liability of $495. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. At the end of 2019, Wilcox anticipates that actual warranty costs will exceed estimated warranty expense by $100 next year and that financial depreciation will exceed tax depreciation by $1,800 in future years. Wilcox has earned income in all past years and expects to earn income in the future. Required: 1. Prepare Wilcox’s income tax journal entry at the end of 2019.…A reconciliation of pretax financial statement income to taxable income is shown below for See Shipping for the year ended December 31, 2018, its first year of operations. The income tax rate is 40%. Pretax accounting income (income statement) $ 600,000 Installment income taxable upon receipt next year (30,000 ) Warranty expense in excess of deductible amount 5,000 Tax depreciation in excess of income statement amount (20,000 ) Taxable income (tax return) $ 555,000 What amount should See report as a noncurrent item related to deferred income taxes in its 2018 balance sheet? A) Deferred income tax asset of $18,000. B) Deferred income tax liability of $20,000. C) Deferred income tax liability of $45,000. D) Deferred income tax liability of $18,000