Cullumber Inc.'s only temporary difference at the beginning and end of 2024 is caused by a $3.75 million deferred gain for tax purposes for an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current asset) is due in equal installments in 2025 and 2026. The related deferred tax liability at the beginning of the year is $1,125,000. In the third quarter of 2024, a new tax rate of 20% is enacted into law and is scheduled to become effective for 2026. Taxable income for 2024 is $6,250,000, and taxable income is expected in all future years.

Cullumber Inc.'s only temporary difference at the beginning and end of 2024 is caused by a $3.75 million deferred gain for tax purposes for an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current asset) is due in equal installments in 2025 and 2026. The related deferred tax liability at the beginning of the year is $1,125,000. In the third quarter of 2024, a new tax rate of 20% is enacted into law and is scheduled to become effective for 2026. Taxable income for 2024 is $6,250,000, and taxable income is expected in all future years.

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 4MC: Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the...

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Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the amount of financial depreciation, resulting in a book value of the depreciable assets of 24,500 for financial reporting purposes and of 20,000 for tax purposes at the end of 2019. In addition, Shadrach recognized a 3,500 estimated liability for legal expenses in the financial statements during 2019; it expects to pay this liability (and deduct it for tax purposes) in 2023. The current tax rate is 30%, no change in the tax rate has been enacted, and the company expects to be profitable in future years. What is the amount of the net deferred tax liability at the end of 2019? a. 300 b. 450 c. 1,050 d. 1,350
Crane Inc's only temporary difference at the beginning and end of 2024 is caused by a $3.72 million deferred gain for tax purposes for an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current asset) is due in equal installments in 2025 and 2026. The related deferred tax liability at the beginning of the year is $1.116,000. In the third quarter of 2024, a new tax rate of 20% is enacted into law and is scheduled to become effective for 2026. Taxable income for 2024 is $6,200,000, and taxable income is expected in all future years. (a) Determine the amount reported as a deferred tax liability at the end of 2024. Deferred tax liability
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Vaughn Inc.’s only temporary difference at the beginning and end of 2019 is caused by a $3,300,000 deferred gain for tax purposes for an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current asset) is due in equal installments in 2020 and 2021. The related deferred tax liability at the beginning of the year is $1,320,000. In the third quarter of 2019, a new tax rate of 20% is enacted into law and is scheduled to become effective for 2021. Taxable income for 2019 is $5,500,000, and taxable income is expected in all future years. Determine the amount reported as a deferred tax liability at the end of 2019. Deferred tax liability $ Prepare the journal entry necessary to adjust the deferred tax liability when the new tax rate is enacted into law. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0…
Vaughn Inc.’s only temporary difference at the beginning and end of 2019 is caused by a $3,300,000 deferred gain for tax purposes for an installment sale of a plant asset, and the related receivable (only one-half of which is classified as a current asset) is due in equal installments in 2020 and 2021. The related deferred tax liability at the beginning of the year is $1,320,000. In the third quarter of 2019, a new tax rate of 20% is enacted into law and is scheduled to become effective for 2021. Taxable income for 2019 is $5,500,000, and taxable income is expected in all future years. Draft the income tax expense portion of the income statement for 2019. Begin with the line “Income before income taxes.” Assume no permanent differences exist. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Sherrod, Incorporated, reported pretax accounting income of $86 million for 2024. The following information relates to differences between pretax accounting income and taxable income: Income from installment sales of properties included in pretax accounting income in 2024 exceeded that reported for tax purposes by $5 million. The installment receivable account at year-end 2024 had a balance of $6 million (representing portions of 2023 and 2024 installment sales), expected to be collected equally in 2025 and 2026. Sherrod was assessed a penalty of $2 million by the Environmental Protection Agency for violation of a federal law in 2024. The fine is to be paid in equal amounts in 2024 and 2025. Sherrod rents its operating facilities but owns one asset acquired in 2023 at a cost of $92 million. Depreciation is reported by the straight-line method, assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the first two…
Sherrod, Incorporated, reported pretax accounting income of $86 million for 2024. The following information relates to differences between pretax accounting income and taxable income: Income from installment sales of properties included in pretax accounting income in 2024 exceeded that reported for tax purposes by $5 million. The installment receivable account at year-end 2024 had a balance of $6 million (representing portions of 2023 and 2024 installment sales), expected to be collected equally in 2025 and 2026. Sherrod was assessed a penalty of $2 million by the Environmental Protection Agency for violation of a federal law in 2024. The fine is to be paid in equal amounts in 2024 and 2025. Sherrod rents its operating facilities but owns one asset acquired in 2023 at a cost of $92 million. Depreciation is reported by the straight-line method, assuming a four-year useful life. On the tax return, deductions for depreciation will be more than straight-line depreciation the first two…