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Class22 - Solutions

Class22 - Solutions - EXERCISE 19-8(a 2007 Income Tax...

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EXERCISE 19-8 (a) 2007 Income Tax Expense ..................................... 336,000 Deferred Tax Asset ($20,000 x 40%) ............ 8,000 Deferred Tax Liability ($30,000 x 40%). 12,000 Income Tax Payable ($830,000 x 40%). 332,000 2008 Income Tax Expense ..................................... 364,000 Deferred Tax Asset ($10,000 x 40%) ............ 4,000 Deferred Tax Liability ($40,000 x 40%). 16,000 Income Tax Payable ($880,000 x 40%). 352,000 2009 Income Tax Expense ..................................... 378,000 Deferred Tax Asset ($8,000 x 40%) .............. 3,200 Deferred Tax Liability ($10,000 x 40%). 4,000 Income Tax Payable ($943,000 x 40%). 377,200 (b) Current assets Deferred tax asset ($8,000 + $4,000 + $3,200) $15,200 Long-term liabilities Deferred tax liability ($12,000 + $16,000 + $4,000) $32,000 The warranty is classified as current because settlement is within one year. The deferred tax liability is noncurrent because the related asset is noncurrent. 1
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EXERCISE 19-8 (Continued) (c) Income before tax $945,000 Income tax expense Current $377,200 Deferred ($4,000 – $3,200) 800 378,000 Net Income $567,000 Note: The details on the current/deferred tax expense can be disclosed in the notes to the financial statements. 2
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EXERCISE 19-9 2004 Income Tax Expense .............................................. 32,000 Income Tax Payable ($80,000 x 40%) ............. 32,000 2005 Income Tax Refund Receivable ............................. 72,000 ($160,000 x 45%) Benefit Due to Loss Carryback (Income Tax Expense) ................................. 72,000 2006 Income Tax Refund Receivable .............................
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