Solutions Chapter 19 - BRIEF EXERCISE 19-1 2010 taxable...

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BRIEF EXERCISE 19-1 2010 taxable income. ................................................................. $120,000 Tax rate. ...................................................................................... X .............................................................................................. 40% 12/31/10 income taxes payable. ............................................... $ 48,000 BRIEF EXERCISE 19-2 Excess depreciation on tax return. .......................................... $40,000 Tax rate. ...................................................................................... 30% Deferred tax liability. ................................................................. $12,000 BRIEF EXERCISE 19-3 Income Tax Expense. .................................................. $67,500*** Deferred Tax Liability. .......................................... 12,000** Income Tax Payable. ............................................ 55,500* *$185,000 x 30% = $55,500 **$40,000 x 30% = $12,000 ***$55,500 + $12,000 = $67,500 The $12,000 deferred tax liability should be classified as a noncurrent liability. The balances in the deferred tax accounts should be classified in the same manner as the related asset. Since property, plant, and equipment is a noncurrent asset, noncurrent liability is the proper classification for the deferred tax liability. BRIEF EXERCISE 19-4 Deferred tax liability, 12/31/11. ........................................................ ............................................................................................... $42,000 Deferred tax liability, 12/31/10. ........................................................ 25,000
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Deferred tax expense for 2011. ....................................................... 17,000 Current tax expense for 2011. ......................................................... 48,000 Total tax expense for 2011. .............................................................. ............................................................................................... $65,000
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BRIEF EXERCISE 19-5 Book value of warranty liability. .................................................... ............................................................................................ $105,000 Tax basis of warranty liability. ....................................................... 0 Cumulative temporary difference at 12/31/10. .............................. 105,000 Tax rate. ............................................................................................ X .................................................................................................... 40% 12/31/10 deferred tax asset. ............................................................ $ 42,000 BRIEF EXERCISE 19-6 Deferred tax asset, 12/31/11. .......................................................... $59,000 Deferred tax asset, 12/31/10. .......................................................... 30,000 Deferred tax benefit for 2011. ......................................................... (29,000)
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This note was uploaded on 11/30/2011 for the course ACCOUNTING 323 taught by Professor None during the Spring '10 term at Prince George's Community College, Largo.

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Solutions Chapter 19 - BRIEF EXERCISE 19-1 2010 taxable...

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