question archive Two independent situations are described below
Two independent situations are described below
Subject:AccountingPrice:2.84 Bought7
Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences:
SITUATION 1 2
Taxable income $42,000 $82,000
Amounts at year-end:
Future deductible amounts 5,200 10,200
Future taxable amounts 0 5,200
Balances at beginning of year, dr (cr):
Deferred tax asset $1,000 $3,570
Deferred tax liability 0 1,000
The enacted tax rate is 35% for both situations.
For each situation, 1 & 2, determine the:
(a) Income Tax payable currently
(b) Deferred Tax Asset-Balance at year end
(c) Deferred Tax Change dr or (cr) for the year
(d) Deferred Tax Liability-Balance at year end
(e) Deferred Tax Liability change dr or (cr) for the year
(f) Income Tax Expense for the year
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Solutions are given below;
Step-by-step explanation
| # | Situation 1 | Situation 2 | |
| Taxable Income | $42,000 | $82,000 | |
| Tax Rate | 35% | 35% | |
| a. | Income Tax Payable Currently | $14,700 | $28,700 |
| Future Deductible Amount | $5,200 | $10,200 | |
| Tax Rate | 35% | 35% | |
| b. | Deferred Tax Asset-Balance at year end | $1,820 | $3,570 |
| Deferred Tax Asset-Balance at year end | $1,820 | $3,570 | |
| Deferred Tax Asset Beginning Balance | $1,000 | $3,570 | |
| c. | Deferred Tax Asset Change dr or (cr) for the year | $820 | $0 |
| Future Taxable Amount | $0 | $5,200 | |
| Tax Rate | 35% | 35% | |
| d. | Deferred Tax Liability-Balance at year end | $0 | $1,820 |
| Deferred Tax Liability-Balance at year end | $0 | $1,820 | |
| Deferred Tax Liability Beginning Balance | $0 | $1,000 | |
| e. | Deferred Tax Liability change dr or (cr) for the year | $0 | ($820) |
| Income Tax Payable currently | $14,700 | $28,700 | |
| Deferred Tax Asset Change dr or (cr) for the year | $820 | $0 | |
| Deferred Tax Liability change dr or (cr) for the year | $0 | ($820) | |
| f. | Income Tax Expense for the year | $13,880 | $27,880 |
