Chapter 16 Spiceland 6th edition

Chapter 16 Spiceland 6th edition - Exercise 16-3 ($ in...

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Exercise 16-3 ($ in millions) December 31 2011 2012 2013 2014 Depreciable asset (net): Accounting basis $80 (20) $60 (20) $40 (20) $20 (20) $0 Tax basis 80 (25 ) 55 (33 ) 22 (15 ) 7 (7 ) 0 T EMPORARY DIFFERENCE 5 $ 5 13 $18 (5) $13 (13) $0 Tax rate 40 % 40 % 40 % 40 % D EFERRED TAX LIABILITY $ 2 $7.2 $ 5.2 $0 originating reversing differences differences Exercise 16-5 Income tax expense (to balance) 30,035,000 Deferred tax asset ([$1 million x 40%] - $435,000) 35,000 Income tax payable ($75 million x 40%) 30,000,000
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Exercise 16-10 Requirement 1
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($ in millions) Current Future Year Deductible 2011 Amounts Temporary difference: (70) Taxable income 180 Enacted tax rate 40 % 40 % Tax payable currently 72 Deferred tax asset (28) Deferred tax asset: Ending balance (balance currently needed) $ 28 Less: beginning balance ($75 x 40%) (30 ) Change needed to achieve desired balance $( 2 ) Journal entry at the end of 2011 Income tax expense (to balance) 74 Deferred tax asset (determined above) 2 Income tax payable (determined above) 72 Requirement 2 ($ in millions) Income tax expense (to balance) 74 Deferred tax asset (determined above) 2 Income tax payable (determined above) 72 Income tax expense 14 Valuation allowance – deferred tax asset ( 1 / 2 x $28) 14 Of course, these two entries can be combined.
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Exercise 16-11 Requirement 1 ($ in millions) Current Future Year Deductible 2011 Amounts Temporary difference: (70) Taxable income 180 Enacted tax rate 40 % 40 % Tax payable currently 72 Deferred tax asset (28) Deferred tax asset: Ending balance (balance currently needed) $ 28 Less: beginning balance ($75 x 40%) (30 ) Change needed to achieve desired balance $( 2 ) Journal entries at the end of 2011 Income tax expense (to balance) 74 Deferred tax asset (determined above) 2 Income tax payable (determined above) 72 Valuation allowance – deferred tax asset 10 Income tax expense 10 Of course, these two entries can be combined.
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Exercise 16-11 (concluded) Requirement 2 ($ in millions) Income tax expense (to balance) 74 Deferred tax asset (determined above) 2 Income tax payable (determined above) 72 Income tax expense 4 Valuation allowance – deferred tax asset ([ 1 / 2 x $28] – $10) 4 Of course, these two entries can be combined. Exercise 16-16
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Requirement 1 ($ in millions) Current Future Future Year Taxable Taxable 2011 Amounts Amounts 2012 2013 2014 2015 [total] Pretax accounting income 33 Temporary difference: Advance rent payment (8 ) 2 2 2 2 8 Taxable income (income tax return) 25 Enacted tax rate 40 % 40 % Tax payable currently 10 Deferred tax liability 3.2 Deferred tax liability: Ending balance (balance currently needed) $3.2 Less: beginning balance 0 .0 Change needed to achieve desired balance $3 .2 Journal entry at the end of 2011 Income tax expense (to balance) 13.2 Deferred tax liability (determined above) 3.2 Income tax payable (determined above) 10.0
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This note was uploaded on 09/20/2011 for the course ACCT 4120 taught by Professor Franz during the Spring '11 term at Toledo.

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Chapter 16 Spiceland 6th edition - Exercise 16-3 ($ in...

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