Holt Co. discovered that in the prior year, it failed to report P40,000 of depreciation related to a newly constructed building. The depreciation was computed correctly for tax purposes. The tax rate for the current year was 20%. How should Holt report the correction in the error in the current year -as an increase in accumulated depreciation of P40,000 -as an increase of depreciation expense of P40,000 -as an increase in depreciation expense of P32,000 -as an increase in accumulated depreciation of P32,000
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Holt Co. discovered that in the prior year, it failed to report P40,000 of
-as an increase in
-as an increase of depreciation expense of P40,000
-as an increase in depreciation expense of P32,000
-as an increase in accumulated depreciation of P32,000
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- In 20X6, Dalia Corp., a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated $67,000 in both 20X4 and 20X5 for financial reporting purposes. Net income in 20X6 is correct. The tax rate is 25%. The error was made only for financial reporting, affecting depreciation and deferred income tax accounts. CCA had been recorded correctly, and thus there will be ho change in taxes payable. Additional information: 20X6 20X5 Beginning retained earnings $454,000 Earnings (includes error in 20X5) Dividends declared 85,400 62,200 $430,400 95,900 72,300 Required: 1. Record the entry in 20X6 to correct the error. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 Record the entry for 20X6 to correct the error.Miller Co. discovered that in the prior year, it failed to report $40,000 of depreciation related to a newly constructed building. The depreciation was computed correctly for tax purposes. The tax rate for the current year was 40%. What was the impact of the error on Miller’s financial statements for the prior year? Understatement of net income of $24,000. Understatement of accumulated depreciation of $40,000. Understatement of depreciation expense of $24,000. Understatement of accumulated depreciation of $24,000.In 20X6, Dalia Corp., a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated $68,000 in both 20X4 and 20X5 for financial reporting purposes. Net income in 20X6 is correct. The tax rate is 35%. The error was made only for financial reporting, affecting depreciation and deferred income tax accounts. CCA had been recorded correctly, and thus there will be no change in taxes payable. Additional information: Z0X6 Beginning retained earnings $456,000 zexs $432,500 Earnings (includes error in 20x5) Dividends declared 85,800 62,500 96,400 72,900 Required: 1. Record the entry in 20X6 to correct the error. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.) Answer is not complete. General Journal Debit Credit 136,000 23,800x 112,200x No 1 Date 20X6 Deferred income tax liability Retained earnings, error correction 2. Prepare the comparative retained earnings section of the statement of changes…
- In 20X6, Dalia Corp., a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated $58,000 in both 20X4 and 20X5 for financial reporting purposes. Net income in 20X6 is correct. The tax rate is 30%. The error was made only for financial reporting, affecting depreciation and deferred income tax accounts. CCA had been recorded correctly, and thus there will be no change in taxes payable. Additional information: 20X6 S Beginning retained earnings $446,000 20X5 $424,100 Earnings (includes error in 20x5) Dividends declared 83,800 61,300 94,200 2,300 Required: 1. Record the entry in 20X6 to correct the error. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)In 2025, Ivanhoe Company discovered an error while preparing its financial statements. A building constructed at the beginning of 2024 costing $1350000 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight- line depreciation is used. Ivanhoe also used straight-line depreciation for tax purposes and properly included depreciation on its tax return. Income tax payable was also reported correctly at a tax rate of 20%. Income before tax and depreciation expenses in 2025 was $450000 What would be the 2025 net income if depreciation had been recorded properly? $324000 O $414000 Ⓒ$405000 $450000 eTextbook and MediaAt the end of the preceding year, JP Motors had a deferred tax asset of $14,750,000, attributable to its only temporary difference of $59,000,000 for estimated expenses. At the end of the current year, the temporary difference is $54,000,000. At the beginning of the year there was no valuation account for the deferred tax asset. At year-end, JP Motors now estimates that it is more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $12,900,000 for the current year and the tax rate is 25% for all years. Required: Prepare journal entries to record JP Motors' income tax expense for the current year.
- As a result of differences between depreciation for financial reporting purposes and tax purposes, the financial reporting basis of Noor Co.’s sole depreciation asset, acquired in 20x1, exceeded its tax basis by P250,000 at December 31, 20x1. This difference will reverse in future years. The enacted tax rate is 30% for 20x1, and 40% for future years. Noor has no other temporary differences. In its December 31, 2001, balance sheet, how should Noor report the deferred tax effect of this difference - Asset (Liability)? a. 75,000 b. (100,000) c. 100,000 d. (75,000)In 2025, Sandhill Company discovered an error while preparing its 2025 financial statements. A building constructed at the beginning of 2024 costing $1299900 has not been depreciated. The estimated useful life of the building is 30 years with no salvage value. Straight-line depreciation is used. Sandhill properly included depreciation on its tax return also using straight-line depreciation. Income tax payable was also reported correctly at a tax rate of 20%. Income before depreciation expense in 2025 was $400000. What was the impact on the following accounts at the start of 2025? Accumulated Depreciation was understated by $86660 and Retained Earnings was overstated by $34664. O Accumulated Depreciation was understated by $43330 and Retained Earnings was overstated by $34664. O Accumulated Depreciation was overstated by $43330 and net income was understated by $43330. O Accumulated Depreciation was understated by $43330 and net income was overstated by $43330.In the previous year, Hasbro Inc had a deferred tax asset of $11,750,000, attributable to its only temporary difference of $47,000,000 for estimated expenses. At the end of the current year, the temporary difference is $42,000,000. At the beginning of the year there was no valuation account for the deferred tax asset. At year-end, Hasbro Inc now estimates that it is more likely than not that one-third of the deferred tax asset will never be realized. Taxable income is $11,700,000 for the current year and the tax rate is 25% for all years. Required:Prepare journal entries to record Hasbro Inc's income tax expense for the current year.
- Saginaw Incorporated completed its first year of operations with a pretax loss of $627,500. The tax return showed a net operating loss of $756,500, which the company will carry forward. The $129,000 book-tax difference results from excess tax depreciation over book depreciation. Management has determined that it should record a valuation allowance equal to the net deferred tax asset. Assuming the current tax expense is zero, prepare the journal entries to record the deferred tax provision and the valuation allowance. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Required: a. Prepare the journal entry to record the deferred tax consequences for recognition of the current year NOL before considering the valuation allowance. b. Prepare the journal entry to record the deferred tax consequences of the depreciation book-tax difference. c. Prepare the journal entry to record the deferred tax consequences of the valuation…Saginaw Inc. completed its first year of operations with a pretax loss of $647,500. The tax return showed a net operating loss of $807,500, which the company will carry forward. The $160,000 book-tax difference results from excess tax depreciation over book depreciation. Management has determined that it should record a valuation allowance equal to the net deferred tax asset. Assuming the current tax expense is zero, prepare the journal entries to record the deferred tax provision and the valuation allowance. (If no entry is required for a transaction/event, select "No Journal Entry Required" In the first account field.) Required: a. Prepare the journal entry to record the deferred tax consequences for recognition of the current year NOL before considering the valuation allowance. b. Prepare the journal entry to record the deferred tax consequences of the depreciation book-tax difference. c. Prepare the journal entry to record the deferred tax consequences of the valuation allowance.…34. Subject : - Accounting In 20X4, Fredup Inc. purchased a piece of equipment for $21,000. The equipment has a 7-year useful life and no residual value. The equipment was erroneously included as an expense in the year. The error was discovered in December 20X8. Required: Prepare the journal entry to record the adjustment in December 20X8. (Assume the company uses straight line depreciation, ignore taxes.)