Do not give image format Complete this question by entering your answers in the tabs below.Req 1No12-a. Prepare the journal entry to record Melissa's 20X1 income tax activity under U.S. GAAP.3-a. Prepare the journal entry to record Melissa's 20X1 income tax activity under IFRS.(If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)2Req 2A and 3A Req 2B and 3BTransaction12Answer is not complete.Tax expense - deferredTax expense - currentTax payableDeferred tax liabilityTax expense - currentDeferred tax assetTax expense - deferredDeferred tax liabilityTax payableGeneral Journal✓✓✓✓Debit6,720✔91,56036,855✔9,240 XCredit91,5606,720✔6,720✔91,560 Melissa Corporation is domiciled in Germany and is listed on both the Frankfurt and New York Stock Exchanges. Melissa has chosen toprepare consolidated financial statements in accordance with U.S. GAAP for filing with the U.S. Securities and Exchange Commissionbut must also prepare consolidated financial statements in accordance with IFRS in accordance with European Union regulations.On December 31, 20X0, Melissa Corporation purchased a small office building for $1,380,000. For tax and financial reportingpurposes, Melissa estimates that the building has a useful life of 40 years with an estimated residual value of $100,000. Melissa usesstraight-line depreciation for financial reporting. Assume that, for tax purposes, Melissa is permitted to deduct 5% of an asset'sdepreciable base in 20X1. This is the only building that Melissa owns.At the end of 20X1, Melissa had the building appraised by a qualified real estate appraiser, who estimated the fair value of the buildingto be $1,172,500. Melissa intends to occupy the building itself, and, therefore, the building is classified as property, plant, andequipment under both U.S. GAAP and IFRS. After being revalued under IFRS, the Building account has a balance of $1,172,500 and theAccumulated depreciation account has a balance of zero. Assume Melissa will have sufficient income in the future to recover anydeferred tax assets that might be recognized.Model used for subsequent measurementPre-tax income before depreciation and revaluation chargeEnacted tax rateU.S. GAAPCost$500,00021%Required:1. Calculate Melissa's taxable income in 20X1.2. Prepare the journal entry to record Melissa's 20X1 income tax activity under U.S. GAAP.3. Prepare the journal entry to record Melissa's 20X1 income tax activity under IFRS.IFRSRevalued atfair value$500,00021%

2-a. Prepare the journal entry to record Melissa's 20X1 income tax activity under U.S. GAAP. 3-a. Prepare the journal entry to record Melissa's 20X1 income tax activity under IFRS. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) Credit No 1 Transaction 1 Tax expense - deferred Tax expense - current Tax payable Deferred tax liability General Journal Debit 6,720 91,560 91,560 6,720

2-a. Prepare the journal entry to record Melissa's 20X1 income tax activity under U.S. GAAP. 3-a. Prepare the journal entry to record Melissa's 20X1 income tax activity under IFRS. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) Credit No 1 Transaction 1 Tax expense - deferred Tax expense - current Tax payable Deferred tax liability General Journal Debit 6,720 91,560 91,560 6,720

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter16: Multijurisdictional Taxation

Section: Chapter Questions

Problem 7P

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