Chapter 16 Homework Problems

Chapter 16 Homework Problems - Problem 16-10 Requirement...

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Problem 16-10 Requirement 1 ($ in millions) Current Future Prior Years Year Deductible 2007 2008 2009 Amounts [total] Accounting loss (135) Non-temporary difference: Fine paid 5 Temporary differences: Loss contingency 10 (10) Taxable loss (120) Loss carryback (75) (30) 105 Loss carryforward 15 (15 ) 0 (25) Enacted tax rate 40 % 40 % 40 % 40 % Tax payable (refundable) (30 ) (12 ) 0 Deferred tax asset (10) Deferred tax asset: Ending balance (balance currently needed) $ 10 Less: beginning balance (0 ) Change needed to achieve desired balance $10 Journal entry at the end of 2009 Receivable – income tax refund ($30 + 12) 42 Deferred tax asset (determined above) 10 Income tax benefit (to balance) 52 Requirement 2 ($ in millions) Operating loss before income taxes $135 Less: Income tax benefit: Tax refund from loss carryback $42
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Future tax benefits 10 52 Net operating loss $ 83 Requirement 3 ($ in millions) Current Future Year Deductible 2010 Amounts Pretax accounting income 60 Temporary differences: Loss contingency (10) Operating loss carryforward (15 ) Taxable income (income tax return) 35 0 Enacted tax rate 40 % 40 % Tax payable 14 Deferred tax asset 0 Deferred tax asset: Ending balance (balance currently needed) $ 0 Less: beginning balance (10 ) Change needed to achieve desired balance $(10 ) Journal entry at the end of 2010 Income tax expense (to balance) 24 Deferred tax asset (determined above) 10 Income tax payable (determined above) 14
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Problem 16-11 Requirement 1 Deferred tax assets and deferred tax liabilities are not reported individually, but combined instead into a net current amount and a net noncurrent amount. Each is reported as either an asset – if deferred tax assets exceed deferred tax liabilities, or as a liability – if deferred tax liabilities exceed deferred tax assets. Deferred tax assets and deferred tax liabilities are classified as either current or noncurrent according to how the related assets or liabilities are classified for financial reporting.
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This note was uploaded on 08/06/2011 for the course ACCT 312 taught by Professor Smith during the Spring '11 term at DeVry Austin.

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Chapter 16 Homework Problems - Problem 16-10 Requirement...

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