EXERC13 Calculating Deferred Income Taxes.The Harmon Corporation prepared the following income statements TA 2and income tax returns for Year 1 through Year 4.Income StatementSales...Operating expenses..Pretax net income.Provisions for income taxes.Net income..Income Tax ReturnSales....Operating expenses...Taxable incomeIncome tax payable ...After-tax net income....I....Year 1$1,000650350140$ 210Year 1$1,000900SA$1008020Year 2$1,000650350140$ 210Year 2$1,000900100Hoy 80$20Year 3$1,000650350140$ 210Year 3$1,000400$1,000650$350140|210Year 4$1,000400600600200200$ 400 $ 400von Wand Insol aCalculate the balance in the company's deferred income tax liability account at the end of each year. Explainwhat a growing balance in the deferred income tax liability is likely to indicate about a company's net incomerelative to its taxable income. Why might investment professionals view this situation positively? Negatively?uses straight-line depreciationTA 2HomeworkMBO

Deferred tax liability (DTL) shows temporary differences between tax on accounting income and tax on…

EXERC 13 Calculating Deferred Income Taxes. The Harmon Corporation prepared the following income statements and income tax returns for Year 1 through Year 4. Income Statement Sales. Operating expenses. Pretax net income. Provisions for income taxes Net income Income Tax Return Sales. Operating expenses. Taxable income Income tax payable After-tax net income. Year 1 $1,000 650 350 140 $ 210 Year 2 $1,000 1650 Year 1 $1,000 900 350 140 $ 210 Year 2 $1,000 900 1000 100 Year 3 $1,000 650 350 140 $ 210 Year 3 $1,000 400 600 200 $1,000 650 350 140 $ 210 Year 4 $1,000 400 600 200 8080 $ 20 $ 20 $ 400 $ 400 TA 2 Calculate the balance in the company's deferred income tax liability account at the end of each year. Explain what a growing balance in the deferred income tax liability is likely to indicate about a company's net income relative to its taxable income. Why might investment professionals view this situation positively? Negatively? muuces straight-line depreciation

EXERC 13 Calculating Deferred Income Taxes. The Harmon Corporation prepared the following income statements and income tax returns for Year 1 through Year 4. Income Statement Sales. Operating expenses. Pretax net income. Provisions for income taxes Net income Income Tax Return Sales. Operating expenses. Taxable income Income tax payable After-tax net income. Year 1 $1,000 650 350 140 $ 210 Year 2 $1,000 1650 Year 1 $1,000 900 350 140 $ 210 Year 2 $1,000 900 1000 100 Year 3 $1,000 650 350 140 $ 210 Year 3 $1,000 400 600 200 $1,000 650 350 140 $ 210 Year 4 $1,000 400 600 200 8080 $ 20 $ 20 $ 400 $ 400 TA 2 Calculate the balance in the company's deferred income tax liability account at the end of each year. Explain what a growing balance in the deferred income tax liability is likely to indicate about a company's net income relative to its taxable income. Why might investment professionals view this situation positively? Negatively? muuces straight-line depreciation

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 39P

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(1) Prepare the statement of income during Year 1. Pre-tax financial income Income tax expense-current Income tax expense-deferred Net income Effective tax rate (2) Prepare the tax accounts section of balance sheet as of December 31, Year 1. |Income tax payable Deferred tax assets Deferred tax liabilities
To compute the provision for income tax, the following 3. What amount of income tax payable should be reported? 4. What amount of total tax expense should be reported: Fecorino Company had pretaxr financial income of P2,500,00g The entity made corporate estimated tax payment in the Tax depreciation in excess of financial statement amount 160,000 Problem 16-30 in the current year. amount of 180, 000 during the current year. information was provided: S60,000 Interest income received Tax depreciation in excess of financial statement amount 280,000 S0% Rent received in advance Corporate tax rate 1. What amount of permanent difference between boo income and taxable income existed at year-end? a. 520,000 b. 360,000 c. 800,000 d. 280,000 2. What amount of current tax expense should be reported? a. 786,000 b. 510,000 c. 750,000 d. 678,000 3. What amount of income tax pavable should be reporer a. 498,000 b. 606,000 c. 330,000 d. 570,000 a. 714,000 b. 726,000 c. 642,000 d. 594,000
Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions. Code Letter Term Code Letter Term A. Future deductible amount H Deferred tax consequences B Income tax payable (or refund) I Future taxable amount Operating loss carryback Deferred tax liability D Valuation allowance K Temporary difference E Deferred tax asset Income tax expense (or benefit) F Operating loss carryforward M Deferred tax expense (or benefit) Taxable income Required: Indicate which term belongs with each definition by choosing the correct term. 1. The deferred tax consequences of future deductible amounts and operating loss carryforwards 2. A difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively X 3. Temporary…
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Calculating Deferred Income Taxes The Sample Corporation prepared the following income statements and income tax returns for Year 1 through Year 4. Income Statement Sales Operating expenses Pretax net income Provisions for income taxes Net income Year 1 Year 2 Year 3 Year 4 $1,000 $1,000 $1,000 $1,000 650 650 650 650 $350 $350 $350 $350 195 195 195 195 $155 $155 $155 $155 Income Tax Return Year 1 Sales $1,000 Year 2 Year 4 $1,000 $1,000 Operating expenses 900 900 400 400 Taxable income $100 $100 $600 $600 310 Income tax payable 80 80 310 After-tax net income $20 $20 $290 $290 Year 3 $1,000 $ Calculate the balance in the company's deferred income tax liability account at the end of each year. Year 1 0 x Year 2 $ 0 x Year 3 $ 0 x Year 4 $ 0✓
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es Required: Determine the amount of average income tax liability per tax return, for each income range provided, using the information in the below table. Taxable Income and Total Tax Liability are in thousands. Note: Enter your answers in whole dollars and not in thousands. Round the final answers to the nearest dollar value. Item Number of returns Taxable income Total tax liability Average tax rate* Ranges of Adjusted Gross Income $15,000 to under $30,000 27,410,421 $ 189,345,926 $ 15,590,244 Under $15,000 30,714,603 $ 5,388,125 $ 532,117 9.88% *The average tax rate is total tax liability divided by taxable income. Under $15,000 $15,000 to under $30,000 $30,000 to under $50,000 $50,000 to under $100,000 $100,000 to under $200,000 $200,000 or more $30,000 to under $50,000 to under $50,000 $100,000 37,547,454 28,926,296 $ 1,912,925,663 $ 639,289,718 $215,589,667 $56,077,985 8.23% 8.77% 11.27% $100,000 to under $200,000 24,180,226 $ 2,687,818, 279 $385,658,662 14.35% $200,000 or more…
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Accounting profit is O A. The The profit or loss is for a period determined before deducting in accordance tax expense O B. The profit or loss is for a period determined in accordance with tax law C. The profit or loss after for a period after deducting tax expense O D. The profit or loss after current tax expense determined accordance with tax law