LIABILITY+EXAMPLE+SOLUTION

LIABILITY+EXAMPLE+SOLUTION - L IAB I L I TY EXAM PLE SOLUT...

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Unformatted text preview: L IAB I L I TY EXAM PLE SOLUT IO N Year 1 Year 2 Year 3 Total 5,000 4,000 6,000 15,000 Expense 3,000 2,000 (200) 4,800 Payment (1000) (3,200) (600) (4,800) Taxable Income 7,000 2,800 5,200 15,000 Tax Rate 20% 20% 20% 20% CVFR 2,000 800 000 CVTR 000 000 000 2,000 800 000 400 160 000 Accounting I ncome Difference FTA balance Yr. Current Income Tax Expense 1,400 1 Taxes Payable 1,400 Future Tax Asset 400 F uture Income Tax Benefit 400 Yr.2 Current Income Tax Expense 560 Taxes Payable 560 Future Income Tax Expense 240 F uture Tax Asset 240 (1) L IAB I L I TY EXAM PLE SOLUT IO N Yr.3 Current Income Tax Expense 1,04 0 Taxes Payable 1,040 F uture Income Tax Expense 16 0 F uture Tax Asset Under the prospective method of accounting for a change in accounting estimates, any prior year(s) misstatement of expense (a $200 overstatement in this example) is to be corrected over the remaining life which in this case is solely t he current year, year3. 160 (2) ...
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LIABILITY+EXAMPLE+SOLUTION - L IAB I L I TY EXAM PLE SOLUT...

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