Chapter+18+questions+from+review+class

Chapter+18+questions+from+review+class - EXERCISE 18-12 (a)...

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EXERCISE 18-12 (a) Balance Deductible Sheet (Taxable) Future Tax Current Account Carrying Tax Temporary Tax Asset Long- Dec. 31, 2011 Amount Basis Differences Rate (Liability) Term PP & E $930,000 $980,000 50,000 45% $ 22,500 LT Construction in Process* 500,000 350,000 (150,000) 45% (67,500) C Future income tax liability, December 31, 2011 Future income tax liability before adjustment Incr. in future income tax liability and future income tax expense for 2011 (45,000) 0 ($ 45,000) * For the completed contract method, the construction in process account reports only construction costs excluding any gross profit recognized under the percentage-of- completion method. (b) Accounting income $195,000 Reversing differences: Property, plant, and equipment: Depreciation expense $170,000 Capital cost allowance ($1,100,000 – $980,000) (120,000) 50,000 Construction in Process: Gross profit – Percentage completion ($500,000 – $350,000) (150,000) Gross profit – Completed contract method 0 (150,000) Taxable income $95,000 Current income taxes at 45% $42,750
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EXERCISE 18-12 (Continued) (c) Current Income Tax Expense. ........................... 42,750 Income Tax Payable. ................................... 42,750 Future Income Tax Expense. ............................. 45,000 Future Income Tax Liability. ....................... 45,000 (d) Income before income taxes $195,000 Income tax expense Current $42,750 Future 45,000 87,750 Net income $107,250 (e) Refer to last two columns in table in part (a) above. Non-current assets
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This note was uploaded on 12/16/2011 for the course ACTG 3P33 taught by Professor N-a during the Fall '08 term at Brock University.

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Chapter+18+questions+from+review+class - EXERCISE 18-12 (a)...

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