ch19 - SOLUTIONS TO B EXERCISES E19-1B (15–20 minutes)...

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Unformatted text preview: SOLUTIONS TO B EXERCISES E19-1B (15–20 minutes) (a) Pretax financial income for 2007 $125,000 Temporary difference resulting in future deductible amounts in 2008 40,000 in 2009 70,000 Taxable income for 2007 $235,000 Taxable income for 2007 $235,000 Enacted tax rate 40% Income tax payable for 2007 $ 94,000 (b) Future Years 2008 2009 Total Future taxable (deductible) amounts $(40,000) $(70,000) $(110,000) Tax rate 40% 40% Deferred tax liability (asset) $(16,000) $(28,000) $ (44,000) Deferred tax asset at the end of 2007 $(44,000) Deferred tax asset at the beginning of 2007 Deferred tax expense for 2007 (increase in deferred tax asset) (44,000) Current tax expense for 2007 (Income tax payable) 94,000 Income tax expense for 2007 $50,000 Deferred Tax Asset.................................................... 44,000 Income Tax Expense................................................. 50,000 Income Tax Payable........................................... 94,000 (c) Income before income taxes $125,000 Income tax expense Current $94,000 Deferred (44,000) 50,000 Net income $ 75,000 19-1 E19-2B (15–20 minutes) (a) Pretax financial income for 2007 $160,000 Excess of tax depreciation over book depreciation (80,000) Subscription revenue received in advance 25,000 Taxable income $105,000 (b) Income Tax Expense................................................ 55,000 Deferred Tax Asset................................................... 8,750 Income Tax Payable ($105,000 X .35)............. 35,750 Deferred Tax Liability....................................... 28,000 Temporary Difference Future Taxable (Deductible) Amounts Tax Rate Deferred Tax (Asset) Liability Depreciation ( $80,000 35% $28,000 Unearned revenue (25,000) 35% $(8,750 ) $(8,750) $28,000 (c) Income Tax Expense................................................ 91,000* Deferred Tax Liability ($20,000 X .35)..................... 7,000 Income Tax Payable ($255,000 X .35)............. 89,250 Deferred Tax Asset........................................... 8,750 *($89,250 – $7,000 + $8,750) 19-2 E19-3B (15–20 minutes) (a) Taxable income for 2007 $280,000 Enacted tax rate 40% Income tax payable for 2007 $112,000 (b) Future Years 2008 2009 2010 2011 Total Future taxable (deductible) amounts $75,000 $75,000 $75,000 $75,000 $300,000 Tax rate 40% 40% 40% 40% Deferred tax liability (asset) $30,000 $30,000 $30,000 $30,000 $120,000 Deferred tax liability at the end of 2007 $120,000 Deferred tax liability at the beginning of 2007 80,000 Deferred tax expense for 2007 (increase required in deferred tax liability) 40,000 Current tax expense for 2007 112,000 Income tax expense for 2007 $152,000 Income Tax Expense.......................................... 152,000 Income Tax Payable................................. 112,000 Deferred Tax Liability.............................. 40,000 19-3 E19-3B (Continued) (c) Income before income taxes $380,000 Income tax expense Current $112,000 Deferred 40,000 152,000 Net income $228,000...
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This note was uploaded on 05/10/2010 for the course ACC 440 BSB1658 taught by Professor Warwick during the Spring '09 term at University of Phoenix.

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ch19 - SOLUTIONS TO B EXERCISES E19-1B (15–20 minutes)...

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