405ch192010 - EXERCISE 19-2 (1520 minutes) (a) Pretax...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
EXERCISE 19-2 (15–20 minutes) (a) Pretax financial income for 2010. ........................... $350,000 Excess of tax depreciation over book depreciation. ................................................ (40,000) Rent received in advance. ....................................... 25,000 Taxable income. ................................................ $335,000 (b) Income Tax Expense. ............................................... 140,000 Deferred Tax Asset. .................................................. 10,000* Income Tax Payable ($335,000 X .40). ............ 134,000 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 ( (25,000) 40% $(10,000 ) $(10,000) $16,000 (c) Income Tax Expense. ............................................... 136,000* Deferred Tax Liability ($10,000 X .40). .................... 4,000 Income Tax Payable ($325,000 X .40). ............ 130,000 Deferred Tax Asset ($25,000 X .40). ................ 10,000 *($130,000 – $4,000 + $10,000) EXERCISE 19-5 (15–20 minutes) (a) Taxable income. ........................................................ $115,000 Enacted tax rate. ........................................................ 40% Income tax payable. .................................................. $ 46,000 (b) Income Tax Expense. ................................................ 80,000 Deferred Tax Asset. ................................................... 14,000
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Income Tax Payable. .......................................... 46,000 Deferred Tax Liability. ....................................... 48,000 Temporary Difference Future Taxable (Deductible) Amounts Tax Rate Deferred Tax (Asset) Liability First one ( $220,000 40% $88,000 Second one ( (35,000 ) 40% $(14,000 ) Totals $185,000 $(14,000 ) $88,000 *Because of a flat tax rate, these totals can be reconciled: $185,000 X 40% = $(14,000) + $88,000. Deferred tax liability at the end of 2010. ................................ $ 88,000 Deferred tax liability at the beginning of 2010. ..................... 40,000 Deferred tax expense for 2010 (increase required in deferred tax liability). ....................................... $ 48,000 Deferred tax asset at the end of 2010. ................................... $ ( 14,000 Deferred tax asset at the beginning of 2010. ........................ 0 Deferred tax benefit for 2010 (increase required in deferred tax asset). .......................................... $(14,000 ) Deferred tax expense for 2010. .............................................. $ 48,000 Deferred tax benefit for 2010. ................................................. (14,000
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/05/2011 for the course ACCT 405 taught by Professor Caylor during the Summer '11 term at South Carolina.

Page1 / 16

405ch192010 - EXERCISE 19-2 (1520 minutes) (a) Pretax...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online