Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 9, Problem 8IRP
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Ayres Services acquired an asset for $82 million in 2018. The asset is depreciated for financial reporting purposes over four years on a
straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%.
Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020, and 2021 are as follows:
Pretax accounting income
Depreciation on the income statement
Depreciation on the tax return.
Taxable income.
($ in millions)
2019
355 $
20.5
(33.5)
Temporary Difference
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2018
$ 335 $
20.5
(25.5)
$ 330 $ 342 $ 375
2020 2021
370 $ 405
20.5 20.5
(15.5) (7.5)
$ 418
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…
In 2021, Crane Company accrued, for financial statement reporting, estimated losses on disposal of unused plant facilities of $3710000. The facilities were sold in March 2022 and a $3710000 loss was recognized for tax purposes. Also in 2021, Crane paid $163200 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 2021 and 2022, and that Crane paid $1280000 in income taxes in 2021, the amount reported as net deferred income taxes on Crane's balance sheet at December 31, 2021, should be a
$371000 liability.
$742000 asset.
$1116800 asset.
$371000 asset.
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…
Chapter 9 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 9 - Prob. 1QPDCh. 9 - Prob. 2QPDCh. 9 - Prob. 3QPDCh. 9 - Prob. 4QPDCh. 9 - Prob. 5QPDCh. 9 - Prob. 6QPDCh. 9 - Prob. 7QPDCh. 9 - Prob. 8QPDCh. 9 - Prob. 9QPDCh. 9 - Explain the difference between a substituted basis...
Ch. 9 - Prob. 11QPDCh. 9 - Prob. 12QPDCh. 9 - Prob. 13QPDCh. 9 - Prob. 14QPDCh. 9 - Prob. 15QPDCh. 9 - Prob. 1APCh. 9 - Prob. 2APCh. 9 - Prob. 3APCh. 9 - Prob. 4APCh. 9 - Prob. 5APCh. 9 - Prob. 6APCh. 9 - This year, Neil Inc. exchanged a business asset...Ch. 9 - Prob. 8APCh. 9 - Prob. 9APCh. 9 - XYZ exchanged an old building for a new like-kind...Ch. 9 - Prob. 11APCh. 9 - Prob. 12APCh. 9 - Prob. 13APCh. 9 - Prob. 14APCh. 9 - Prob. 15APCh. 9 - Prob. 16APCh. 9 - Prob. 17APCh. 9 - Prob. 18APCh. 9 - Prob. 19APCh. 9 - On October 18 of last year, a flood washed away...Ch. 9 - Prob. 21APCh. 9 - Prob. 22APCh. 9 - Prob. 23APCh. 9 - Mr. ZJ owns a sole proprietorship. The business...Ch. 9 - Prob. 25APCh. 9 - Prob. 26APCh. 9 - Prob. 27APCh. 9 - Prob. 28APCh. 9 - Prob. 29APCh. 9 - Prob. 30APCh. 9 - Prob. 31APCh. 9 - Prob. 32APCh. 9 - Prob. 33APCh. 9 - Prob. 34APCh. 9 - Prob. 1IRPCh. 9 - Prob. 2IRPCh. 9 - Prob. 3IRPCh. 9 - Prob. 4IRPCh. 9 - Prob. 5IRPCh. 9 - Prob. 6IRPCh. 9 - Prob. 7IRPCh. 9 - Prob. 8IRPCh. 9 - Prob. 9IRPCh. 9 - Prob. 10IRPCh. 9 - Prob. 1RPCh. 9 - Prob. 2RPCh. 9 - Prob. 3RPCh. 9 - Prob. 1TPCCh. 9 - Prob. 2TPCCh. 9 - Prob. 3TPCCh. 9 - Croyden is a calendar year, accrual basis...
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