T11F-Chp-03-7-Tax Accounting Handout

T11F-Chp-03-7-Tax Accounting Handout -...

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9b7a496c24e2d682dc1d00d44b7095821b8103f8.xlsx 1. Concord had GAAP income before tax of $200,000 in 2010, not counting gain on asset sale. Concord bought land for $60,000 in 2005 as a investment. On December 31, 2010, Concord sold the land to Local Corp. for $100,000. Local Corp. paid $25,000 on 12-31-2010. Local will make 3 payments of $25,000 (plus interest) on the last day of 2011, 2012 and 2013. Concord prepares its GAAP financial statements and recognizes the entire gain in 2010. Concord used the installment sales method on federal income tax return. There is no state income tax. Concord is in the 40% income tax bracket in 2010 and expects to be in that bracket in future years. GAAP net income before tax will be $200,000 in 2011. Provide journal entry for income tax expense? GAAP Return Net income before taxes - before gain $200,000 $200,000 Gain $40,000 $10,000 Net income before taxes $240,000 $210,000 Income tax expense Income tax payable 2010 2011 Dr. Cr. Dr. Cr. Income Tax Expense Deferred Tax Income Tax Payable Currently 2. Continue the preceding question. What is the deferred tax account balance at the end of 2012? 3 UNCC Co. uses percentage of completion method in GAAP statements. In 2011, UNCC contracted to build a bridge for $15,000,000. UNCC estimated total construction costs to be $12,000,000. UNCC incurred $4,000,000 of construction costs on in 2011. How much gross profit should UNCC report in its GAAP statements for 2011? Total Contract Price $15,000,000 Projected profit on project Projected cost for project (12,000,000) Costs incurred to date - (%) Projected profit on project 3,000,000
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T11F-Chp-03-7-Tax Accounting Handout -...

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