Corning-Howell reported taxable income in 2021 of $120 million. At December 31, 2021, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below: Carrying Amount Tax Basis Assets Current Net accounts receivable $10million 12million Prepaid insurance 20 million 0 Prepaid advertising 6 million 0 Noncurrent Investments in equity securities (fair value)* 4m 0 Buildings and equipment (net) 360million 280million Liabilities Current Deferred subscription revenue 14 million 0 Long-term Liability—compensated future absences 594 million 0 *Gains and losses taxable when investments are sold. The total deferred tax asset and deferred tax liability amounts at January 1, 2021, were $156.25 million and $25 million, respectively. The enacted tax rate is 25% each year. Required:1. Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2021.2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2021.3. Determine the income tax payable currently for the year ended December 31, 2021.4. Prepare the journal entry to record income taxes for 2021.
Corning-Howell reported taxable income in 2021 of $120 million. At December 31, 2021, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below: Carrying Amount Tax Basis Assets Current Net accounts receivable $10million 12million Prepaid insurance 20 million 0 Prepaid advertising 6 million 0 Noncurrent Investments in equity securities (fair value)* 4m 0 Buildings and equipment (net) 360million 280million Liabilities Current Deferred subscription revenue 14 million 0 Long-term Liability—compensated future absences 594 million 0 *Gains and losses taxable when investments are sold. The total deferred tax asset and deferred tax liability amounts at January 1, 2021, were $156.25 million and $25 million, respectively. The enacted tax rate is 25% each year. Required:1. Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2021.2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2021.3. Determine the income tax payable currently for the year ended December 31, 2021.4. Prepare the journal entry to record income taxes for 2021.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 12P: Comprehensive Colt Company reports pretax financial income of 143,000 in 2019. In addition to pretax...
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Question
Corning-Howell reported taxable income in 2021 of $120 million. At December 31, 2021, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below:
| Carrying Amount | Tax Basis | |||||||
| Assets | ||||||||
| Current | ||||||||
| Net accounts receivable | $10million | 12million | ||||||
| Prepaid insurance | 20 million | 0 | ||||||
| Prepaid advertising | 6 million | 0 | ||||||
| Noncurrent | ||||||||
| Investments in equity securities (fair value)* | 4m | 0 | ||||||
| Buildings and equipment (net) | 360million | 280million | ||||||
| Liabilities | ||||||||
| Current | ||||||||
| Deferred subscription revenue | 14 million | 0 | ||||||
| Long-term | ||||||||
| Liability—compensated future absences | 594 million | 0 | ||||||
*Gains and losses taxable when investments are sold.
The total
Required:
1. Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2021.
2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2021.
3. Determine the income tax payable currently for the year ended December 31, 2021.
4. Prepare the
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