During 2021, a construction company that began operations in 2019 changed from the completed-contract method to the percentage-of-completion method for accounting purposes but not for tax purposes. Gross profit figures under both methods for the past three years appear below:     Completed-Contract   Percentage-of-Completion 2019     $  385000       $  790000   2020     525000       850000   2021     600000       950000         $1510000       $2590000   Assuming an income tax rate of 30% for all years and that comparative statements are not issued, the effect of this accounting change on prior periods should be reported by a increase of $511000 on the 2021 income statement. $755000 on the 2021 retained earnings statement. $511000 on the 2021 retained earnings statement. $755000 on the 2021 income statement.

ABC Corporation provides you with the following information for the 2020 tax year, which was the company’s first year of operation:Book Income Before Taxes $100,000,000Book Depreciation $ 5,000,000MACRS Depreciation $ 7,500,000Foreign Sourced Income $ 40,000,000Assume a federal tax rate of 21%, disregard state taxes.a. Calculate federal taxable income.b. Calculate the federal tax payable and federal tax expense.c. Given your answer above in b., is a deferred tax asset or a deferred tax liability created? Provide the journal entry needed to reflect this.

During 2024, its first year of operations, Baginski Steel Corporation reported a net operating loss of $360,000 for financial reporting and tax purposes. During 2025, Baginski reported income of $200,000 for financial reporting and tax purposes. The enacted tax rate is 25%. Required: - Prepare the journal entry to recognize Baginski’s 2025 tax expense or tax benefit. - Show the lower portion of the 2025 income statement that reports income tax expense or benefit.

During 2020, Sheffield Co.'s first year of operations, the company reports pretax financial income at $252,300. Sheffield's enacted tax rate is 45% for 2020 and 20% for all later years. Sheffield expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2020, are summarized as follows. Future Years 2021 2022 2023 2024 2025 Total Future taxable (deductible) amounts: Installment sales Depreciation Unearned rent $31,300 5,800 (48,500) (48,500) $31,300 $31,300 5,800 $5,800 $5,800 $93,900 29,000 (97,000) 5,800 Complete the schedule below to compute deferred taxes at December 31, 2020. (Negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Deferred Tax Future Taxable Temporary Difference (Deductible) Amounts Tax Rate (Asset) Liability $ Installment sales $93,900 1% Depreciation 29,000 1% Unearned rent (97,000) % Totals THA

Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022.     Pretax Income (loss)   Tax Rate 2019   $80,000     40 % 2020   (180,000)     40 % 2021   230,000     20 % 2022   100,000     20 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2019–2022 were enacted in 2019. Prepare the portion of the income statement, starting with “Operating loss before income taxes,” for 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

At the beginning of 2021, a company had future deductible amounts of $400,000 and the enacted tax rate was 27%. In October 2021, a new income tax act is signed into law that lowers the tax rate to 20% for 2022 and future years. To record the change, the company will (enter 1, 2, 3, or 4 that represents the correct answer): Credit Income Tax Expense by $28,000. Debit Income Tax Expense by $28,000. Credit Deferred Tax Liability by $28,000. Debit Deferred Tax Asset by $28,000.

Vishnu

AA Company began operations at the beginning of 2020. The following information pertains to this company: Pretax financial income for 2020 is P100,000 The tax rate enacted for 2020 and future years is 40% Differences between 2020 income statement and the tax return are listed below:  Warranty expense accrued for financial reporting purposes amounts to P7,000. Warranty deductions per tax return amounted to P2,000 Income on construction contracts using the percentage of completion method per books amounts to P92,000. Income on construction contracts for tax purposes amounts to P67,000. Depreciation of PPE for financial reporting purposes amounts to P60,000. Depreciation of these assets amounts to P80,000 for the tax return. A P3,500 fine paid for violation of pollution laws was deducted in computing pretax financial income. Interest revenue earned on an investment in tax-exempt bonds amounts to P1,500.  Taxable income is expected for the next few years. Compute the deferred tax…

At the beginning of 2025, Pronghorn Construction Company changed from the cost-recovery method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the cost- recovery method for tax purposes. For years prior to 2025, pretax income under the two methods was as follows: percentage-of-completion $114,200, and cost-recovery $78,200. The tax rate is 40%. Pronghorn has a profit-sharing plan, which pays all employees a bonus at year-end based on 2% of pretax income. Compute the indirect effect of Pronghorn's change in accounting principle that will be reported in the 2025 income statement, assuming that the profit-sharing contract explicitly requires adjustment for changes in income numbers. Indirect effect

During 2020, Marigold Co.’s first year of operations, the company reports pretax financial income at $247,300. Marigold’s enacted tax rate is 45% for 2020 and 20% for all later years. Marigold expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2020, are summarized as follows.     Future Years           2021   2022   2023   2024   2025   Total Future taxable (deductible) amounts:                                  Installment sales   $33,800        $33,800        $33,800                 $101,400       Depreciation   5,800      5,800      5,800   $5,800   $5,800   29,000       Unearned rent   (47,000)     (47,000)                 (94,000)       Complete the schedule below to compute deferred taxes at December 31, 2020. (Negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)…