FIN_48_three_differences_solution

FIN_48_three_differences_solution - FIN 48: A deferred tax...

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FIN 48: A deferred tax asset, a deferred tax liability and uncertainty – SOLUTION In 2009 Stumberg Company reported pretax financial income of $415,000. Stumberg recorded the following transactions in 2009: $20,000 prepaid rent which is included in book income in 2010, $35,000 excess MACRS deprecation, and $30,000 accrued liability deducted for both book and tax purposes; however, the amount of the liability is subject to dispute. Stumberg applies the recognition and measurement criteria found in FIN 48, and determines that only $22,000 of the accrued liability is currently deductible. That is, a $22,000 deduction is more likely than not of being sustained on audit, based on the technical merits of the position, and is the largest amount of benefit cumulatively greater than 50% likely to be realized Assume Stumberg’s tax rate is 35% Required : (1) Compute Stumberg’s 2009 taxable income. (2) Prepare the journal entry (or entries) to record Stumberg’s income taxes for 2009.
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This note was uploaded on 03/04/2010 for the course TAX 6845 taught by Professor Kelliher,c during the Fall '08 term at University of Central Florida.

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FIN_48_three_differences_solution - FIN 48: A deferred tax...

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