Iowa Corporation began operations in January 2021 and purchased an equipment for $60,000. Iowa uses straight-line depreciation over 4 years, for financial reporting purposes. For tax purposes, the equipment is fully depreciated in the year of purchase. Pretax accounting income for 2021 was $200,000, which includes interest revenue of $30,000 from municipal bonds. The enacted tax rate is 25% for all years. There are no other differences between accounting and taxable income.   Required:   a. Calculate taxable income in 2021. b. Prepare journal entry in 2021. c. Prepare journal entry assuming taxable income in 2022 is $180,000.

For the year ended December 31, 2024, Fidelity Engineering reported pretax accounting income of $988,000. Selected information for 2024 from Fidelity's records follows: Interest income on municipal governmental bonds $ 44,000 Depreciation claimed on the 2024 tax return in excess of depreciation on the income statement Carrying amount of depreciable assets in excess of their tax basis at year-end Warranty expense reported on the income statement 68,000 112,000 32,000 Actual warranty expenditures in 2024 22,000 Fidelity's income tax rate is 25%. At January 1, 2024, Fidelity's records indicated balances of zero and $11,000 in its deferred tax asset and deferred tax liability accounts, respectively. Required: Determine the amounts necessary to record income taxes for 2024, and prepare the appropriate journal entry. What is Fidelity's 2024 net income?

In 2025, Sheridan Company accrued, for financial statement reporting, estimated losses on disposal of unused plant facilities of $3650000. The facilities were sold in March 2026 and a $3650000 loss was recognized for tax purposes. Also in 2025, Sheridan paid $156000 in premiums for a two-year life insurance policy in which the company was the beneficiary. Assuming that the enacted tax rate is 20% in both 2025 and 2026 and that Sheridan paid $1220000 in income taxes in 2025, the amount reported as net deferred income taxes on Sheridan's balance sheet at December 31, 2025, should be a O $698800 asset. O $365000 asset. O $365000 liability. O $730000 asset.

At the end of the year, the deferred tax asset account had a balance of $12 million attributable to a temporary difference of $48 million in a liability for estimated expenses. Taxable income is $68 million. No temporary differences existed at the beginning of the year, and the tax rate is 25% Prepare the journal entry(s) to record income taxes, assuming it is more likely than not that three-fourths of the deferred tax asset will not ultimately be realized. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). View transaction list Journal entry worksheet 2 Record the income tax expense. Note: Enter debits before credits. Transaction General Journal Debit Credit

Grand Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In addition, the company received $300,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $50,000. Grand's beginning book (tax) basis in its fixed assets was $2,000,000 ($1,800,000) and its ending book (tax) basis is $2,500,000 ($1,900,000). Compute the company's current income tax expense or benefit. Note: Leave no answer blank. Enter N/A or zero. Current income tax Deferred income tax N/A $ expense

Bridgeport Corp. purchased depreciable assets costing $36,600 on January 2, 2023. For tax purposes, the company uses CCA in a class that has a 30% rate. For financial reporting purposes, the company uses straight-line depreciation over five years. The enacted tax rate is 25% for all years. This depreciation difference is the only reversing difference the company has. Calculate the amount of capital cost allowance and depreciation expense from 2023 to 2027, as well as the corresponding balances for the carrying amount and undepreciated capital cost of the depreciable assets at the end of each of the years 2023 to 2027. Assume that these assets are considered “eligible equipment” for purposes of the Accelerated Investment Incentive (under the AII, instead

The following information applies to Pharoah Corporation, which reports under IFRS. 1. Prior to 2022, taxable income and accounting income were identical. 2 Accounting income was $1.7 million in 2022 and $1.41 million in 2023. 3. On January 1, 2022, equipment costing $1.59 million was purchased. It is being depreciated on a straight-line basis over eight years for financial reporting purposes, and is a Class 8-20% asset for tax purposes. 4. Tax-exempt interest income of $70,000 was received in 2023. 5. The tax rate is 30% for all periods. 6. Taxable income is expected in all future years. 7. Pharoah had 100,000 common shares outstanding throughout 2023. (a) Your answer is partially correct. Calculate the amount of capital cost allowance and depreciation expense for 2022 and 2023, and the corresponding carrying amount and undepreciated capital cost of the depreciable assets at the end of 2022 and 2023. 2022 2023 Capital Cost Allowance 159000 286200 +A Undepreciated Capital Cost 1431000…

On January 1, year 1 $1,000,000 was collected in advance for rental of a building for a five-year period. The entire $1,000,000 was reported as taxable income for the year. The enacted tax rate for this year is 44%. The enacted tax rate for all future years was 46%. As the result of a change in the tax law, the enacted tax rate for years all years after year 3 is 45%. Make the journal entry to record income tax expense at December 31, year 2, assuming income tax payable is $1,749,000. SHOW COMPUTATIONS

Westmore Industries – which has an effective tax rate of 20% - purchased a $1,000,000 piece of industrial equipment on January 1, 2021. For tax purposes, Westmore depreciates the equipment 40%, 25%, 25%, and 10% in the years 2021, 2022, 2023, and 2024, respectively. For financial reporting purposes, Westmore depreciates the equipment straight-line to a salvage value of zero over the four year useful life.   What amount of deferred tax liability will Westmore record at 12/31/2021, 12/31/2022, 12/31/2023, and 12/31/2024?

Ayres Services acquired an asset for $96 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2021. The enacted tax rate is 25% Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return Taxable income 2021 $380 24 (96) Cumulative Temporary Difference Deferred Tax Liability $308 ($ in millions) 2023 2024 2022 $400 24 (0) (0) $415 $450 24 24 (0) $424 $439 $474 Required: For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should…