Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 17, Problem 17.16E
Net Operating Loss, Carryforward, Tax Rate Change. Hamilton Container Company reported the following income (loss) information for the first 4 years of its operations.
| Year | Income (Loss) before Tax | Tax Rate (%) |
| 1 | $(400,000) | 40% |
| 2 | 100,000 | 34 |
| 3 | 230,000 | 34 |
| 4 | 620,000 | 42 |
There are no uncertainties about the realization of the net operating loss benefits. All tax rate changes were enacted as of the beginning of the year. All tax rate changes are not known until the year of change.
Required
- a. Prepare the
journal entry (ies) needed to record the annual tax provision for Years 1 through 4. - b. Prepare a partial income statement for each year.
- c. Prepare the footnote in both dollars and percentages required to reconcile Hamilton's federal tax rate to its effective income tax rate each year.
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Students have asked these similar questions
The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars):
Pretax accounting income: $195
Pretax accounting income included:
Overweight fines (not deductible for tax purposes) 5
Depreciation expense 70
Depreciation in the tax return 110
The applicable tax rate is 25%. There are no other temporary or permanent differences.
Franklin Freightways should have recorded ($ in millions):
During the current year, Newtech Corporation sold a segment of its business at a loss of $225,000.
Until it was sold, the segment had a current period operating loss of $200,000. The company had
$750,000 from continuing operations for the current year.
Prepare the lower part of the income statement, beginning with the $750,000 income from
continuing operations. Follow tax allocation procedures, assuming that all changes in income
are subject to a 40% income tax rate. Disregard earnings per share disclosures.
Newtech Corporation
Partial Income Statement
Income from continuing operations
Discontinued operations
Current Year
Loss from operations of discontinued segment (net of tax) $ 200,000
Loss on disposal of discontinued segment (net of tax)
Net income
$
750,000
0
0
$
0
Zeff Company prepared the following reconciliation for the
· first year of operations:
1,600,000
Pretax financial income
Nontaxable interest received
Long-term loss accrual in excess of deductible amount
Depreciation in excess of financial depreciation
( 50,000)
100,000
( 250,000)
1,400,000
Taxable income (Tax rate is 30%)
What amount should be reported as total income tax
expense?
a. 495,000
b. 480,000
c. 465,000
d. 420,000
What amount should be reported as deferred tax liability
a. 90,000
b. 45,000
с. 75,000
d. 30,000
What amount should be reported as deferred tax asset?
a. 30,000
b. 90,000
c. 45,000
d. 75,000
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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