Chapter 19 solutions to exercises

Chapter 19 solutions to exercises - EXERCISE 19-1 (a)...

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EXERCISE 19-1 (a) Pretax financial income for 2007 $300,000 Temporary difference resulting in future taxable amounts in 2008 (55,000) in 2009 (60,000) in 2010 (65,000) Taxable income for 2007 $120,000 Taxable income for 2007 $120,000 Enacted tax rate 30% Income tax payable for 2007 $ 36,000 (b) Future Years 2008 2009 2010 Total Future taxable (deductible) amounts $55,000 $60,000 $65,000 $180,000 Tax rate 30% 30% 30% Deferred tax liability (asset) $16,500 $18,000 $19,500 $ 54,000 Deferred tax liability at the end of 2007 $54,000 Deferred tax liability at the beginning of 2007 0 Deferred tax expense for 2007 (increase in deferred tax liability) 54,000 Current tax expense for 2007 (Income tax payable) 36,000 Income tax expense for 2007 $90,000 Income Tax Expense. ........................................................................... 90,000 Income Tax Payable. .................................................................. 36,000 Deferred Tax Liability. .............................................................. 54,000 (c) Income before income taxes $300,000 Income tax expense Current $36,000 Deferred 54,000 90,000 Net income $210,000 Note: The current/deferred tax expense detail can be presented in the notes to the financial statements.
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EXERCISE 19-2 (a) Pretax financial income for 2006 $300,000 Excess of tax depreciation over book depreciation (40,000) Rent received in advance 20,000 Taxable income $280,000 (b) Income Tax Expense. ......................................................................... 120,000 Deferred Tax Asset. ........................................................................... 8,000* Income Tax Payable ($280,000 X .40). ................................... 112,000 Deferred Tax Liability. ............................................................ 16,000** Temporary Difference Future Taxable (Deductible) Amounts Tax Rate Deferred Tax (Asset) Liability **Depreciation ( $40,000 40% $16,000 *Unearned rent ( (20,000) 40% $(8,000 ) $(8,000) $16,000 (c) Income Tax Expense. ......................................................................... 134,000* (40% of $335,000) Deferred Tax Liability ($10,000 X .40). ............................................ 4,000 Income Tax Payable ($325,000 X .40). ................................... 130,000 Deferred Tax Asset ($20,000 X .40). ....................................... 8,000 *($130,000 – $4,000 + $8,000) EXERCISE 19-3 (a) Taxable income for 2007 $405,000 Enacted tax rate 40% Income tax payable for 2007 $162,000 (b) Future Years 2008 2009 Total Future taxable (deductible) amounts $175,000 $175,000 $350,000 Tax Rate 40% 40% Deferred tax liability (asset) $ 70,000 $ 70,000 $140,000 Deferred tax liability at the end of 2007 $140,000
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Deferred tax liability at the beginning of 2007 92,000 Deferred tax expense for 2007 (increase required in deferred tax liability) 48,000 Current tax expense for 2007 162,000 Income tax expense for 2007 $210,000 Income Tax Expense. .................................................................. 210,000
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Chapter 19 solutions to exercises - EXERCISE 19-1 (a)...

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