Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 17, Problem 17.12E
Net Operating Loss, Carryback. Phlash Photo Labs, Ltd. provided you the following information for the 3 years ended December 31.
Year | Income (Loss) before Tax | Tax Rate (%) |
1 | $120,000 | 34% |
2 | 70,000 | 25 |
3 | (280,000) | 40 |
Required
- a. Assuming no book-tax differences and no uncertainty regarding the realization of the tax benefits of the net operating loss carryforward, prepare the
journal entry to record the tax expense for each of the 3 years presented. The company always elects the carryback/carryforward option. Future tax rates are expected to remain unchanged. - b. Prepare a partial income statement for Year 3.
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Range Rover Inc. had taxable income of $152,000 for the year. The GAAP basis of accounts receivable (net) $9,600 less than the tax basis of accounts receivable. Assuming a tax rate of 25%, record the
income tax journal entry on December 31. Assume zero beginning balances in deferred tax accounts
Note: faline in a journal entry ant required for the transaction select N/A as the account names and leave the Dr. and Cr. answers blank (zero)
Dr.
Account Name
Date
Dec 31
income Tax Expose
Income Tax Payate
Deferred Tax Asset
Tocesant income
On December 31, for GAAP purposes, Clubs Inc. reported a balance of $56,000 in Prepaid Maintenance Expense for services to be received over the following year. For tax purposes, however, prepaid costs are deducted when
paid. Taxable income is $184,000 and the tax rate is 25%. Assume no other temporary differences or any beginning balances in deferred tax accounts.
Required
a. Record the income tax journal entry on December 31.
•Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).
Date
Account Name
Dec. 31 Income Tax Expense
N/A
Income Tax Payable
Deferred Tax Liability
To record income tax expense
Dr.
Cr.
60,000
0
0
0
0
46,000 ▼
0
14,000
b. Prepare the income tax section of the income statement for the year and provide the disclosure of current and deferred tax expense.
•Note: Do not use negative signs with your answers.
Partial Income Statement
For the year ended December 31
Income…
Accounting income or loss for Aberdeen Corporation, following IFRS, is below:
Year Accounting income/(loss) Tax rate percent
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
$160,000
250,000
80,000
(160,000)
(380,000)
130,000
145,000
30
30
25
25
25
25
25
Assume that there were no permanent or temporary differences between accounting and taxable income.
Required
Prepare the tax-related journal entries for Year 3 to Year 7. Aberdeen Corporation believes that it will be able to use any loss carryforward in future years.
Aberdeen Corporation will apply the available carryback provisions to the earliest years first. Include your calculations.
Chapter 17 Solutions
Intermediate Accounting (2nd Edition)
Ch. 17 - Prob. 17.1QCh. 17 - When will income tax expense and income taxes...Ch. 17 - Will permanent differences cause the effective tax...Ch. 17 - When do permanent differences arise?Ch. 17 - How are deferred tax assets and deferred tax...Ch. 17 - Prob. 17.6QCh. 17 - Prob. 17.7QCh. 17 - Prob. 17.8QCh. 17 - Prob. 17.9QCh. 17 - How does a firm determine the need for a valuation...
Ch. 17 - Prob. 17.11QCh. 17 - Prob. 17.12QCh. 17 - Prob. 17.13QCh. 17 - How does an entity account for uncertain tax...Ch. 17 - Prob. 17.15QCh. 17 - Prob. 17.16QCh. 17 - Do U.S. GAAP and IFRS classify deferred tax...Ch. 17 - Prob. 17.18QCh. 17 - Cavan Company prepared the following...Ch. 17 - Prob. 17.2MCCh. 17 - Prob. 17.3MCCh. 17 - Prob. 17.4MCCh. 17 - Prob. 17.5MCCh. 17 - Prob. 17.6MCCh. 17 - Prob. 17.7MCCh. 17 - Prob. 17.1BECh. 17 - Income Taxes Payable. Limmox Company has...Ch. 17 - Permanent Differences. Simmox Company's income...Ch. 17 - Permanent Differences. Plimmox Company's income...Ch. 17 - Permanent Differences, Reconciliation of Statutory...Ch. 17 - Prob. 17.6BECh. 17 - Prob. 17.7BECh. 17 - Prob. 17.8BECh. 17 - Prob. 17.9BECh. 17 - Prob. 17.10BECh. 17 - Temporary Differences, Deferred Tax Liability....Ch. 17 - Temporary Differences. Deferred Tax Asset....Ch. 17 - Temporary Differences, Deferred Tax Asset. Using...Ch. 17 - Prob. 17.14BECh. 17 - Realizability of Deferred Assets. Maves, Inc....Ch. 17 - Prob. 17.16BECh. 17 - Change in Tax Rates. Finer Shoes Company recorded...Ch. 17 - Change in Tax Rates, IFRS. Use the same...Ch. 17 - Prob. 17.19BECh. 17 - Prob. 17.20BECh. 17 - Prob. 17.21BECh. 17 - Prob. 17.22BECh. 17 - Prob. 17.23BECh. 17 - Prob. 17.24BECh. 17 - Prob. 17.25BECh. 17 - Prob. 17.1ECh. 17 - Prob. 17.2ECh. 17 - Prob. 17.3ECh. 17 - Prob. 17.4ECh. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Prob. 17.7ECh. 17 - Prob. 17.8ECh. 17 - Change in Tax Rates, Permanent Difference,...Ch. 17 - Prob. 17.10ECh. 17 - Prob. 17.11ECh. 17 - Net Operating Loss, Carryback. Phlash Photo Labs,...Ch. 17 - Net Operating Loss, Carryforward. Loggins Lumber...Ch. 17 - Prob. 17.14ECh. 17 - Prob. 17.15ECh. 17 - Net Operating Loss, Carryforward, Tax Rate Change....Ch. 17 - Prob. 17.17ECh. 17 - Prob. 17.18ECh. 17 - Uncertain Tax Positions. Lewis Eagle Corporation...Ch. 17 - Uncertain Tax Positions. Based on the information...Ch. 17 - Prob. 17.1PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Temporary Differences, Deferred Tax Liabilities....Ch. 17 - Prob. 17.4PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.6PCh. 17 - Net Operating Loss, Carryback, Carryforward,...Ch. 17 - Prob. 17.8PCh. 17 - Net Operating Loss, Carryback. Carryforward. CPF...Ch. 17 - Prob. 17.10PCh. 17 - Prob. 17.11PCh. 17 - Prob. 17.12PCh. 17 - Permanent Differences, Temporary Tax Differences,...Ch. 17 - Prob. 1JCCh. 17 - Prob. 2JCCh. 17 - Prob. 1FSCCh. 17 - Prob. 1SSCCh. 17 - Prob. 2SSCCh. 17 - Prob. 3SSCCh. 17 - Scene 1: The concept of the deferred tax liability...Ch. 17 - Basis for Conclusions Case 2: Uncertain Tax...
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