ACT3392SpringTraditionalHWCh19&20SolutionA

ACT3392SpringTraditionalHWCh19&20SolutionA -...

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HOMEWORK - SPRING 2010 1. (3 points) 2010 GAAP-based income before income taxes $1,500,000; 2011 $2,000,000; 2010 tax return had additional $100,000 depreciation deductions; this excess reverse 50% in 2011, 30% in 2012, 20% in 2013; at 12-31-10, GAAP-based balance sheet $75,000 unearned revenue which will be reported as rent revenue in 2011 GAAP-based income statement; tax rate for all years is 30%. Compute Pieters’ taxable income for 2010. GAAP-based income before income taxes $1,500,000 Additional depreciation deductions for tax purposes (100,000) Additional taxable income for cash received for rent 75,000 Taxable income $1,475,000 Prepare JE to record income tax expense, deferred income taxes, income taxes payable 2010 Income tax expense ($1,500,000 x 30%) $450,000 Deferred tax assets ($75,000 x 30%) 22,500 Income taxes payable ($1,475,000 x 30%) $442,500 Deferred tax liabilities ($100,000 x 30%) 30,000 Prepare JE to record income tax expense, deferred income taxes, income taxes payable 2011 GAAP-based income before income taxes $2,000,000 Smaller depreciation deduction on the tax return (50% x $100,000) 50,000 Rental income that was taxed during 2010 ( 75,000) Taxable income $1,975,000 Income tax expense ($2,000,000 x 30%) $600,000 Deferred tax liabilities ($30,000 x 50%) 15,000 Deferred tax assets ($75,000 x 30%) $ 22,500 Income taxes payable ($1,975,000 x 30%) 592,500 2. (2 points) At 12-31-10, Girman deferred tax asset account $200,000 – the result of a single cumulative temporary difference of $500,000; 12-31-11, cumulative temporary difference $800,000; Girman’s taxable income for 2011 $1,200,000; tax rate 40%; no valuation allowance as of 12-31-10.
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