Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2024 through 2027 except for differences in depreciation on an operational asset. The asset cost $120,000 and is depreciated for income tax purposes in the following amounts: 20241 2025 2026 2027 $ 39,600 52,800 18,000. 9,600 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows: Accounting income before taxes and depreciation 2024 2025 $ 60,000 $ 80,000 2026 2027 $ 70,000 $ 70,000 Assume the income tax rate for 2024 and 2025 was 30%; however, during 2025, tax legislation was passed to raise the tax rate to 40% beginning in 2026. The 40% rate remained in effect through the years 2026 and 2027 Both the accounting and income tax periods end December 31. Required: Prepare the journal entries to record income taxes for the years 2024 through 2027 Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list

Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2024 through 2027 except for differences in depreciation on an operational asset. The asset cost $120,000 and is depreciated for income tax purposes in the following amounts: 20241 2025 2026 2027 $ 39,600 52,800 18,000. 9,600 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows: Accounting income before taxes and depreciation 2024 2025 $ 60,000 $ 80,000 2026 2027 $ 70,000 $ 70,000 Assume the income tax rate for 2024 and 2025 was 30%; however, during 2025, tax legislation was passed to raise the tax rate to 40% beginning in 2026. The 40% rate remained in effect through the years 2026 and 2027 Both the accounting and income tax periods end December 31. Required: Prepare the journal entries to record income taxes for the years 2024 through 2027 Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list

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 5MC: At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial...

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At the beginning of 2019, Conley Company purchased an asset at a cost of 10,000. For financial reporting purposes, the asset has a 4-year life with no residual value and is depreciated by the straight-line method beginning in 2019. For tax purposes, the asset is depreciated under MACRS using a 5-year recovery period. Prior to 2019, Conley had no deferred tax liability or asset. The difference between depreciation for financial reporting purposes and income tax purposes is the only temporary difference between pretax financial income and taxable income. The current income tax rate is 30%, and no change in the tax rate has been enacted for future years. In 2019 and 2020, taxable income will be higher or lower than financial income by what amount?
Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2021 through 2024 except for differences in depreciation on an operational asset. The asset cost $110,000 and is depreciated for income tax purposes in the following amounts: 2021$36,300 2022 48,400 2023 16,500 2024 8,800 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows: 2021 2022 2023 2024 Accounting income before taxes and depreciation $70,000 $90,000 $80,000 $80,000 Assume the income tax rate for 2021 and 2022 was 30%; however, during 2022, tax legislation was passed to raise the tax rate to 40% beginning in 2023. The 40% rate remained in effect through the years 2023 and 2024. Both the accounting and income tax periods end December 31. Required: Prepare the journal…
Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2021 through 2024 except for differences in depreciation on an operational asset. The asset cost $160,0o0 and is depreciated for income tax purposes in the following amounts: $52, 800 78, 400 24, 80e 12, 800 2021 2022 2023 2024 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows: 2021 $ 98,000 $11e, 00e $100, 00e $109, 000 2822 2023 2024 Accounting income before taxes and depreciation Assume the income tax rate for 2021 and 2022 was 30%; however, during 2022, tax legislation was passed to raise the tax rate to 40% beginning in 2023. The 40% rate remained in effect through the years 2023 and 2024. Both the accounting and income tax periods end December 31. Required: Prepare the…
Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2021 through 2024 except for differences in depreciation on an operational asset. The asset cost $180,000 and is depreciated for income tax purposes in the following amounts: 2021 $59,400 2022 79,200 27,000 2023 2024 14,400 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes. Income amounts before depreciation expense and income taxes for each of the four years were as follows: 2023 $110,000 2024 $110,000 2021 2022 Accounting income before taxes and depreciation $100,000 $120,000 Assume the income tax rate for 2021 and 2022 was 30%; however, during 2022, tax legislation was passed to raise the tax rate to 40% beginning in 2023. The 40% rate remained in effect through the years 2023 and 2024. Both the accounting and income tax periods end December 31. Prepare the journal entries…
Zekany Corporation would have had identical income before taxes on both its income tax returns and income statements for the years 2021 through 2024 except for differences in depreciation on an operational asset. The asset cost $220,000 and is depreciated for income tax purposes in the following amounts: 2021 $ 72,600 2022 96,800 2023 33,000 2024 17,600 The operational asset has a four-year life and no residual value. The straight-line method is used for financial reporting purposes.Income amounts before depreciation expense and income taxes for each of the four years were as follows: 2021 2022 2023 2024 Accounting income before taxes and depreciation $120,000 140,000 130,000 130,000 Assume the income tax rate for 2021 and 2022 was 30%; however, during 2022, tax legislation was passed to raise the tax rate to 40% beginning in 2023. The 40% rate remained in effect through the years 2023 and 2024. Both the accounting and income tax…
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Ayres Services acquired an asset for $168 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions) 2021 2022 2023 2024 Pretax accounting income $ 385 $ 405 $ 420 $ 455 Depreciation on the income statement 42 42 42 42 Depreciation on the tax return (60 ) (64 ) (26 ) (18 ) Taxable income $ 367 $ 383 $ 436 $ 479 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. Beginning of 2021 End of 2021 End of 2022 End of 2023 End of 2024 Cumulative…
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Ayres Services acquired an asset for $128 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset’s cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions) 2021 2022 2023 2024 Pretax accounting income $ 360 $ 380 $ 395 $ 430 Depreciation on the income statement 32 32 32 32 Depreciation on the tax return (55 ) (39 ) (21 ) (13 ) Taxable income $ 337 $ 373 $ 406 $ 449 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…
Ayres Services acquired an asset for $116 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020, and 2021 are as follows: (S in millions) 2019 $ 420 $ 440 $ 455 29.0 2018 2020 2021 $ 490 Pretax accounting income Depreciation on the income statement Depreciation on the tax return 29.0 29.0 29.0 (34.0) (42.0) (24.0) 415 $ 427 (16.0) $ 503 Taxable income $ 460 Required: Determine (a) the 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. Show all amounts as positive amounts. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Beginning of 2018 End of…
Ayres Services acquired an asset for $112 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions) 2021 2022 2023 2024 Pretax accounting income Depreciation on the income $350 $370 $385 $420 28 28 28 28 statement Depreciation on the tax return (53) (29) (19) (11) Taxable income $325 $369 $394 $437 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 "O" wherever applicable. Enter your answers in millions rounded to 2 decimal place (i.e., 5,500,000 should be entered as 5.50).) Beginning of 2021 End of 2021 End of 2022…