FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Use this information for parts A and B. In 2026, Goodfellas Company reported pretax GAAP income of $400,000. During 2026, Goodfellas had the following differences between GAAP and tax: Recognized $100,000 installment sale revenue under GAAP in 2026. This revenue will be recognized for tax purposes in equal amounts over the next four years. Recognized $50,000 of depreciation in 2026 for tax. Starting in 2027, GAAP depreciation is $10,000 per year for the next five years. Received $100,000 in unearned rent revenue in 2026. Rent will be earned in equal amounts in 2027 and 2028. The tax rate for 2026 is 30 percent and 20 percent thereafter. A) What journal entry does Goodfellas record for taxes in 2026?arrow_forwardIn 2022, NB, Incorporated's federal taxable income was $242,000. Compute the required installment payments of 2023 tax in each of the following cases: Required: a. NB's 2023 taxable income is $593,000. b. NB's 2023 taxable income is $950,000. c. NB's 2023 taxable income is $1,400,000. a. Total installment payments b. Total installment payments c. Total installment payments Amountarrow_forwardIn 2022 Charmed, Inc. recorded book income of $420,000. The company's only temporary difference relates to a $66,000 installment sale that it recorded for book purposes; there are no permanent differences. Charmed anticipates receiving payments equally over the following three years. The current enacted tax rate in 2022 is 39%. The substantively enacted tax rates for the following three years are 34%, 39%, and 47%, respectively.Under IFRS, what deferred tax amount should Charmed record for this temporary difference? Group of answer choices $31,020 $26,400 $24,640 $25,740arrow_forward
- Please do not give solution in image format ?.arrow_forwardHardevarrow_forwardFor 2022, MSU Corporation has $500,000 of adjusted taxable income, $22,000 of business interest income, and $120,000 of business interest expense. It has average annual gross receipts of more than $27,000,000 over the prior three taxable years. a. What is MSU's interest expense deduction for 2022? b. How much interest expense can be deducted for 2022 if MSU's adjusted taxable income is $300,000?arrow_forward
- Nirvana Corporation reports pretax financial income of $260,000 for 2022. The following items cause taxable income to be different than pretax financial income. Rental income on the 2022 tax return is $65,000 greater than on the income statement. Depreciation expense on the tax return is greater than depreciation on the income statement by $40,000. Interest on an investment in a municipal bond of $6,500 is reported on the income statement. Nirvana's tax rate is 25% for all years. There are no deferred taxes at the beginning of 2022. The company expects to realize only 40% of the benefit of any deferred tax assets. The fiscal year ends December 31, 2022. Required: 1. Prepare the journal entries to record i) income tax expense, income taxes payable, and deferred income taxes for 2022, and ii) any valuation allowance needed. 2. Indicate clearly what would be reported on the income statement beginning with income before income taxes for the year ended December 31, 2022 from just…arrow_forwardThe following information is available for Splish Corporation for 2020. 1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $116,000. This difference will reverse in equal amounts of $29,000 over the years 2021–2024. 2. Interest received on municipal bonds was $10,200. 3. Rent collected in advance on January 1, 2020, totaled $60,000 for a 3-year period. Of this amount, $40,000 was reported as unearned at December 31, 2020, for book purposes. 4. The tax rates are 40% for 2020 and 35% for 2021 and subsequent years. 5. Income taxes of $312,000 are due per the tax return for 2020. 6. No deferred taxes existed at the beginning of 2020. (a) Compute taxable income for 2020. Taxable income for 2020 $enter Taxable income for 2020 in dollarsarrow_forwardGreenville Industries uses the accrual basis to account for all sales transactions. Sales for 2022 total $500,000. Included in this amount is $70,000 in receivables from sales on installment. Installment sales are considered revenue for book purposes, but not for tax purposes. Operating expenses total $170,000 and are treated the same for book and tax purposes. Assuming a 40% tax rate, what is the amount of Greenville's deferred tax asset or liability? OA. $14,000 deferred tax liability B. $28,000 deferred tax liability OC. $28,000 deferred tax asset OD. $14,000 deferred tax assetarrow_forward
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