Pito Company has been in operation for several years. During those years, the company has been profitable and it expects to continue to be profitable in the foreseeable future. At the beginning of 2016, Pito has a deferred tax asset of $360 pertaining to one futuredeductible amount. During 2016, Pito earned taxable income of $51,000 which was taxed at a rate of 30% (no change in the tax rate has been enacted for future years). At the end of 2016, the book value of the current liability to which the deferred tax asset relates forfinancial reporting purposes exceeded the book value for income tax purposes by $6,000.Required:1. Prepare Pito's income tax journal entry at the end of 2016.2. Show how the deferred tax asset is reported on Pito's December 31, 2016, balance sheet.

Working Note: 1. At the end of the year 2016, The book value of the current liability is $6,000…

Answered: Pito Company has been in operation for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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At the beginning of 2016, Norris Company had a deferred tax liability of $6,600, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial reporting. The income tax rate is 30% for 2015 and 2016, but in 2015 Congress enacted a 39% tax rate for 2017 and future years. Norris’s accounting records show the following pretax items of financial income for 2016: income from continuing operations, $120,300 (revenues of $351,500 and expenses of $231,200); gain on disposal of Division F, $24,000; loss from operations of discontinued Division F, $11,500; and prior period adjustment, $14,100, due to an error that understated revenue in 2015. All of these items are taxable; however, financial depreciation for 2016 on assets related to continuing operations exceeds tax depreciation by $4,600. Norris had a retained earnings balance of $161,300 on January 1, 2016, and declared and paid cash dividends of $32,800 during 2016. Required: 1.…
At the end of 2012, its first year of operations, Glow Company prepared a reconciliation between accounting income and taxable income as reflected in the table below. The estimated litigation expense of P6,000,000 will be deductible in 2013 when it is expected to be actually paid. Use of the depreciable assets will result in taxable amounts of P3,000,000 in each of the next three years. The income tax rate is 30% for all years. Assuming no payment has been paid for income taxes, what is the income tax payable at the end of 2012? How much is deferred tax asset at December 31, 2012? a. P450,000 b. P900,000 c. P1,350,000 d. P1,800,000
Teal Corporation began operations in 2020 and reported pretax financial income of $224,000 for the year. Teal’s tax depreciation exceeded its book depreciation by $44,000. Teal’s tax rate for 2020 and years thereafter is 30%. In its December 31, 2020, balance sheet, what amount of deferred tax liability should be reported? Deferred tax liability to be reported $enter the deferred tax liability to be reported
At the end of 2012, its first year of operations, Glow Company prepared a reconciliation between accounting income and taxable income as reflected in the table below. The estimated litigation expense of P6,000,000 will be deductible in 2013 when it is expected to be actually paid. Use of the depreciable assets will result in taxable amounts of P3,000,000 in each of the next three years. The income tax rate is 30% for all years. Assuming no payment has been paid for income taxes, what is the income tax payable at the end of 2012? a. P0 b. P450,000 c. P900,000 d. P1,350,000
The whole question is as follows: At the beginning of 2016, Norris Company had a deferred tax liability of $6,600, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial reporting. The income tax rate is 30% for 2015 and 2016, but in 2015 Congress enacted a 39% tax rate for 2017 and future years. Norris’s accounting records show the following pretax items of financial income for 2016: income from continuing operations, $120,300 (revenues of $351,500 and expenses of $231,200); gain on disposal of Division F, $24,000; loss from operations of discontinued Division F, $11,500; and prior period adjustment, $14,100, due to an error that understated revenue in 2015. All of these items are taxable; however, financial depreciation for 2016 on assets related to continuing operations exceeds tax depreciation by $4,600. Norris had a retained earnings balance of $161,300 on January 1, 2016, and declared and paid cash dividends of $32,800…
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.
At the end of 2021, Schrutte Inc. in its first year of operations, had pretax financial income of $650,000. The company had extra depreciation taken for tax purposes in the amount of $975,000. Estimated expenses that were deducted for financial income but not yet paid amounted to $425,000. It is estimated that the expenses will be paid in 2022. The tax rate for all years is 25% Which of the following items are included in the journal entry at the end of the year? Question 13 options: a) credit deferred tax liability by $106,250. b) debit Income Tax Expense by $162,500 c) debit Deferred Tax Asset by 243,750. d) credit to Income Tax Payable account by $100,000.
The following information has been obtained for Tamarisk Corporation.
Marigold Corporation began 2020 with a $39,560 balance in the Deferred Tax Liability account. At the end of 2020, the related cumulative temporary difference amounts to $301,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2020 is $451,500, the tax rate for all years is 20%, and taxable income for 2020 is $348,300. - (a) Compute income taxes payable for 2020. Income taxes payable e Click if you would like to Show Work for this question: Open Show Work

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