Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Question
Chapter 18, Problem 5P
1.
To determine
Prepare journal to record the entry for income tax of Corporation W at the end of 2019.
2.
To determine
Prepare the lower portion of Corporation W’s income statement.
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Wicks Corporation began operations on January 1, 2019. At the end of 2019, Wicks reported pretax financial income of $65,800 and taxable income of $63,430, due to two temporary differences. The income tax rate is 30% for 2019 through 2021, but Congress has enacted a tax rate of 35% for 2022 and beyond. To determine its deferred taxes, Wicks prepared the following schedule of expected future taxable and deductible amounts for the two temporary differences:
2020
2021
2022
2023
Future taxable amounts
$5,300
$4,600
$4,800
$3,900
Future deductible amount
(15,700)
Required:
1.
Prepare Wicks’s income tax journal entry at the end of 2019. Assume a valuation allowance is not required.
2.
Prepare the lower portion of the 2019 income statement for Wicks.
Discord Inc. income tax return shows taxes currently payable for 2020 of $85,000. The company reported deferred tax assets of $35,000 at the end of 2019 and $24,000 at the end of 2020. Accord reported deferred tax liabilities of $48,000 at the end of 2019 and $54,000 at the end of 2020. Determine the amount of income tax expense reported by Discord for 2020.
During 2020, Marigold Co.’s first year of operations, the company reports pretax financial income at $247,300. Marigold’s enacted tax rate is 45% for 2020 and 20% for all later years. Marigold expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2020, are summarized as follows.
Future Years
2021
2022
2023
2024
2025
Total
Future taxable (deductible) amounts:
Installment sales
$33,800
$33,800
$33,800
$101,400
Depreciation
5,800
5,800
5,800
$5,800
$5,800
29,000
Unearned rent
(47,000)
(47,000)
(94,000)
Complete the schedule below to compute deferred taxes at December 31, 2020. (Negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)…
Chapter 18 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 18 - What source is used to determine income tax...Ch. 18 - Prob. 2GICh. 18 - Prob. 3GICh. 18 - Prob. 4GICh. 18 - Prob. 5GICh. 18 - Prob. 6GICh. 18 - What are the three characteristics of a liability,...Ch. 18 - Prob. 8GICh. 18 - When does a corporation establish a valuation...Ch. 18 - List the steps necessary to measure and record a...
Ch. 18 - Prob. 11GICh. 18 - Prob. 12GICh. 18 - Prob. 13GICh. 18 - Prob. 14GICh. 18 - Prob. 15GICh. 18 - Describe an operating loss carryforward. List the...Ch. 18 - Prob. 17GICh. 18 - Prob. 18GICh. 18 - Prob. 19GICh. 18 - Prob. 20GICh. 18 - Prob. 21GICh. 18 - Prob. 22GICh. 18 - Prob. 23GICh. 18 - Which of the following is not a cause of a...Ch. 18 - Which of the following is an argument in favor of...Ch. 18 - Prob. 3MCCh. 18 - Prior to and during 2019, Shadrach Company...Ch. 18 - At the beginning of 2019, Conley Company purchased...Ch. 18 - Oliver Company earned taxable income of 7,500...Ch. 18 - Prob. 7MCCh. 18 - Prob. 8MCCh. 18 - Brooks Company reported a prior period adjustment...Ch. 18 - Which component of current income is not disclosed...Ch. 18 - Parker Company identifies depreciation as the only...Ch. 18 - Refer to RE18-1. Assume that Parkers taxable...Ch. 18 - In the current year, Madison Corporation had...Ch. 18 - Refer to RE18-3. Prepare the additional journal...Ch. 18 - Turnip Company purchased an asset at a cost of...Ch. 18 - Prob. 6RECh. 18 - Compute Radish Companys taxable income given the...Ch. 18 - Sky Company reports a pretax operating loss of...Ch. 18 - Prob. 9RECh. 18 - Kline Company has the following items of pretax...Ch. 18 - Barth James Inc. has the following deferred tax...Ch. 18 - Cole Company had a deferred tax liability of 1,000...Ch. 18 - Future Taxable Amount Arrow Company began...Ch. 18 - Change in Tax Rates At the end of 2019, Sentry...Ch. 18 - Temporary Difference At the end of 2019, its first...Ch. 18 - Single Temporary Difference: Multiple Rates At the...Ch. 18 - Prob. 5ECh. 18 - Valuation Account At the end of 2019, its first...Ch. 18 - Deferred Tax Asset and Valuation Account Zeta...Ch. 18 - Incomc Taxes Then Company has been in operation...Ch. 18 - Prob. 9ECh. 18 - Multiple Temporary Differences Vickers Company...Ch. 18 - Multiple Tax Rates For the year ended December 31,...Ch. 18 - Temporary and Permanent Differences Lin has just...Ch. 18 - Temporary and Permanent Differences Assume the...Ch. 18 - Operating Loss At the end of 2019, Keil Company...Ch. 18 - Operating Loss At the end of 2019, its first year...Ch. 18 - Operating Loss Baxter Company began operations in...Ch. 18 - Intraperiod Tax Allocation Wright Company reports...Ch. 18 - Prob. 18ECh. 18 - Prob. 19ECh. 18 - Balance Sheet Presentation Thiel Company reports...Ch. 18 - Uncertain Tax Position At the end of the current...Ch. 18 - Definitions The FASB has defined several terms in...Ch. 18 - Temporary and Permanent Differences In the current...Ch. 18 - Multiple Temporary Differences Wilcox Company has...Ch. 18 - Interperiod Tax Allocation Klerk Company had four...Ch. 18 - Prob. 5PCh. 18 - Interperiod Tax Allocation Quick Company reports...Ch. 18 - Deferred Tax Liability: Depreciation At the...Ch. 18 - Deferred Tax Liability: Depreciation Gire Company...Ch. 18 - Interperiod Tax Allocation Peterson Company has...Ch. 18 - Operating Loss Ross Company has been in business...Ch. 18 - Prob. 11PCh. 18 - Comprehensive Colt Company reports pretax...Ch. 18 - Prob. 13PCh. 18 - Comprehensive Jayryan Company sells products in a...Ch. 18 - Prob. 1CCh. 18 - Prob. 2CCh. 18 - Prob. 3CCh. 18 - Interperiod and Intraperiod Tax Allocation Income...Ch. 18 - Prob. 5CCh. 18 - Intel-period Tax Allocation Chris Green, CPA, is...Ch. 18 - Prob. 7CCh. 18 - Analyzing Coca-Colas Income Tax Disclosures Obtain...Ch. 18 - Prob. 9C
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