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- At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the amount of financial depreciation, resulting in a book value of the depreciable assets of 24,500 for financial reporting purposes and of 20,000 for tax purposes at the end of 2019. In addition, Shadrach recognized a 3,500 estimated liability for legal expenses in the financial statements during 2019; it expects to pay this liability (and deduct it for tax purposes) in 2023. The current tax rate is 30%, no change in the tax rate has been enacted, and the company expects to be profitable in future years. What is the amount of the net deferred tax liability at the end of 2019? a. 300 b. 450 c. 1,050 d. 1,350Ironwood Corporation has ordinary taxable income of $65,000 in 2019, and a short-term capital loss of $15,000. What is the corporation's tax liability for 2019? $7,500 $5,250 $10,500 $13,650 None of the above
- Bramble Corp. has a deferred tax asset account with a balance of $68,600 at the end of 2024 due to a single cumulative temporary difference of $343,000. At the end of 2025, this same temporary difference has increased to a cumulative amount of $463,000. Taxable income for 2025 is $824,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (List all debit entries before credit entries. 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 CreditWildhorse, Inc. has a deferred tax asset account with a balance of $262,200 at the end of 2024 due to a single cumulative temporary difference of $874,000. At the end of 2025 this same temporary difference has decreased to a cumulative amount of $774,000. Taxable income for 2025 is $674,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (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. List all debit entries before credit entries.) Account Titles and Explanation Debit CreditSkysong, Inc. has a deferred tax asset account with a balance of $257,100 at the end of 2024 due to a single cumulative temporary difference of $857,000. At the end of 2025 this same temporary difference has decreased to a cumulative amount of $757,000. Taxable income for 2025 is $657,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (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. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit (b) Assuming that it is more likely than not that one-half of the deferred tax asset will not be realized, prepare the…
- Marin Corp. has a deferred tax asset account with a balance of $80,800 at the end of 2024 due to a single cumulative temporary difference of $404,000. At the end of 2025, this same temporary difference has increased to a cumulative amount of $430,000. Taxable income for 2025 is $801,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (List all debit entries before credit entries. 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 (b) Assuming that it is more likely than not that $5,200 of the deferred tax asset will not be realized, prepare the journal…Cheyenne Corp. has a deferred tax asset account with a balance of $78,400 at the end of 2024 due to a single cumulative temporary difference of $392,000. At the end of 2025, this same temporary difference has increased to a cumulative amount of $482,500. Taxable income for 2025 is $791,900. The tax rate is 20% for all years. At the end of 2024, Cheyenne Corp. had a valuation account related to its deferred tax asset of $47,000. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized in full. (List all debit entries before credit entries. 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 (To record income tax expense) (To adjust allowance account) Debit CreditCallaway Corp. has a deferred tax asset account with a balance of $150,000 at the end of 2017 due to a single cumulative temporary difference of $375,000. At the end of 2018, this same temporary difference has increased to a cumulative amount of $500,000. Taxable income for 2018 is $850,000. The tax rate is 40% for all years.Instructions(a) Record income tax expense, deferred income taxes, and income taxes payable for 2018, assuming that it is probable that the deferred tax asset will be realized.(b) Assuming that it is probable that $30,000 of the deferred tax asset will not be realized, prepare the journal entry at the end of 2018 to recognize this probability.
- Bramble, Inc has a deferred tax asset account with a balance of $260,400 at the end of 2024 due to a single cumulative temporary difference of $868,000. At the end of 2025 this same temporary difference has decreased to a cumulative amount of $768,000. Taxable income for 2025 is $668,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2024. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2025, assuming that it is more likely than not that the deferred tax asset will be realized. (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. List all debit entries before credit entries.) Account Titles and Explanation Income Tax Expense Income Tax Payable Deferred Tax Liability Debit 113600 20000 Credit 123600 (b) Assuming that it is more likely than…Sage Corp. has a deferred tax asset account with a balance of $72,400 at the end of 2019 due to a single cumulative temporary difference of $362,000. At the end of 2020, this same temporary difference has increased to a cumulative amount of $440,000. Taxable income for 2020 is $843,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2019. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming that it is more likely than not that the deferred tax asset will be realized. (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 Income Tax Expense Income Tax Payable Debit Account Titles and Explanation (b) Assuming that it is more likely than not that $15,600 of the deferred tax asset will not be realized,…Teal Corp. has a deferred tax asset account with a balance of $73,600 at the end of 2019 due to a single cumulative temporary difference of $368,000. At the end of 2020, this same temporary difference has increased to a cumulative amount of $436,000. Taxable income for 2020 is $739,000. The tax rate is 20% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2019.(a) Record income tax expense, deferred income taxes, and income taxes payable for 2020, assuming that it is more likely than not that the deferred tax asset will be realized. (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 0 for the amounts.) (b) Assuming that it is more likely than not that $13,600 of the deferred tax asset will not be realized, prepare the journal entry at the end of 2020 to record the valuation account. (Credit account titles are…