Problem 16-9 (Algo) Determine deferred tax assets and liabilities from book-tax differences; financial statement effects [LO16-2, 16-3] Corning-Howell reported taxable income in 2024 of $200 million. At December 31, 2024, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below: Assets Current Net accounts receivable Prepaid insurance Prepaid advertising Noncurrent Investments in equity securities (fair value)* Buildings and equipment (net) Liabilities Current Deferred subscription revenue Long-term Liability-compensated future absences Gains and losses taxable when investments are sold. Carrying Amount Tax Basis $ 88 million $ 92 million 100 million 84 million 84 million 440 million 360 million 92 million 674 million The total deferred tax asset and deferred tax liability amounts at January 1, 2024, were $196.25 million and $25 million, respectively. The enacted tax rate is 25% each year. Required: 1. Determine the total deferred tax asset and deferred tax liability amounts at December 31, 2024. 2. Determine the increase (decrease) in the deferred tax asset and deferred tax liability accounts at December 31, 2024. 3. Determine the income tax payable currently for the year ended December 31, 2024. 3034

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 1P: Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are...

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Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions. 1. The deferred tax consequences of future deductible amounts and operating loss carryforwards 2. A difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively 3. Temporary difference that results in taxable amounts in future years when the related asset or liability is recovered or settled, respectively 4. The future effects on income taxes, as measured by the applicable enacted tax rate and provisions of the enacted tax low, resulting from temporary differences and operating loss carryforwards at the end of the current year 5. The change during the year in a corporations deferred tax liabilities and assets 6. The deferred tax consequences of future taxable amounts 7. The portion of o deferred tax asset for which it is more likely than not that a tax benefit will not be realized 8. Temporary difference that results in deductible amounts in future years when the related asset or liability is recovered or settled, respectively 9. The sum of income tax payable and deferred tax expense (or benefit) 10. The amount of income taxes paid or payable (or refundable) for the current year 11. An excess of tax deductible expenses over taxable revenues in a year that may be carried forward to reduce taxable income in a future year 12. The excess of taxable revenues over tax deductible expenses and exemptions for the year 13. Income tax expense divided by income before income taxes
LO.3, 4, 5 Using the legend provided below, classify each statement under 2019 tax law. a. A foreign tax credit is available. b. The deduction of charitable contributions is subject to percentage limitation(s). c. Excess charitable contributions can be carried forward for five years. d. On the contribution of inventory to charity, the full amount of any appreciation can be claimed as a deduction. e. Excess capital losses can be carried forward indefinitely. f. Excess capital losses cannot be carried back. g. A net short-term capital gain is subject to the same tax rate as ordinary income. h. The deduction for qualified business income may be available. i. A dividends received deduction is available. j. The like-kind exchange provisions of 1031 are available. k. A taxpayer with a fiscal year of May 1April 30 has a due date for filing a Federal income tax return of July 15. l. Estimated Federal income tax payments may be required.

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