Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Chapter 13, Problem 13.6.3E
To determine
Introduction: Income tax is a mandatory tax which is paid by the individual of the country on its income of the financial year. It is to be paid to government and is calculated as per income tax laws. Every individual or business is bound to pay income tax on its income generated during the fiscal year. Also it has to file the return i.e. income tax returns yearly as per the laws.
Interim reporting: Interim reporting is made in between the fiscal year. It is made before the completion of fiscal year in mostly public corporation for taking various decisions for the remaining period. Mostly quarterly and half yearly report is prepared.
To choose: The correct answer.
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Assume that The Bell Company operates in an industry for which NOL carryback is allowed. The Bell Company had the following operating results:
Year
Income (loss)
Tax rate
Income tax
2018
40,000
25
%
10,000
2019
40,000
25
%
10,000
2020
50,000
30
%
15,000
2021
(130,000
)
30
%
0
What is the income tax refund receivable?
A) $27,000.
B) $24,000.
C) $25,000
D) $21,000.
Exercise 19.8 (Two Temporary Differences, One rate, 3 years).
Button Company has the following two temporary differences between its income tax expense and income taxes payable.
2020
2021
2022
Pretax Financial Income
$840,000
$910,000
$945,000
Excess Depreciation Expense on tax Return
(30,000)
(40,000)
(10,000)
Excess Warranty Expense in Financial Income
20,000
10,000
8,000
Taxable Income
$830,000
$880,000
$943,000
The income tax rate is 20% for all years.
Instructions:
a) Assuming there were no temporary differences prior to 2020, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2020,2021, and 2022.
b) Indicate how deferred taxes will be reported on the 2022 balance sheet. Button’s product warranty is for 12 months.
Deferred tax asset ( $ 0 + $ 0 + $ 0 )..............................$ 0
Deferred tax liability ( $ 0 + $ 0 + $ 0…
Reconciling between Effective and Statutory Tax Rates
Baltimore Inc. reported pretax GAAP income of $72,000 in 2020. In analyzing differences between GAAP income and taxable income, the company determined that it had deducted $9,000 in
nondeductible fines and added $5,040 in tax-exempt municipal interest revenue to GAAP income. The statutory tax rate is 25%.
Prepare a reconciliation between Baltimore Inc.'s effective and statutory tax rates.
• Note: Round percentage to one decimal place (for example, enter 3.4 for 3.35%).
Percentage
Statutory tax rate
0 %
Tax-exempt income
0 %
Non-deductible expense
0 %
Effective taxX rate
0 %
Chapter 13 Solutions
Advanced Financial Accounting
Ch. 13 - Prob. 13.1QCh. 13 - Prob. 13.2QCh. 13 - What are the three 10 percent significance tests...Ch. 13 - Prob. 13.4QCh. 13 - A company has 10 industry segments, of which the...Ch. 13 - Prob. 13.6QCh. 13 - Prob. 13.7QCh. 13 - Prob. 13.8QCh. 13 - Prob. 13.9QCh. 13 - Prob. 13.10Q
Ch. 13 - Prob. 13.11QCh. 13 - Prob. 13.12QCh. 13 - Prob. 13.13QCh. 13 - Prob. 13.14QCh. 13 - Maness Company made a change in accounting for its...Ch. 13 - Prob. 13.1CCh. 13 - Prob. 13.2CCh. 13 - Prob. 13.3CCh. 13 - Prob. 13.7CCh. 13 - Prob. 13.8CCh. 13 - Prob. 13.9CCh. 13 - Reportable Segments Data for the seven operating...Ch. 13 - Prob. 13.2.1ECh. 13 - Prob. 13.2.2ECh. 13 - Prob. 13.2.3ECh. 13 - Prob. 13.2.4ECh. 13 - Prob. 13.2.5ECh. 13 - Prob. 13.2.6ECh. 13 - Prob. 13.2.7ECh. 13 - Prob. 13.2.8ECh. 13 - Prob. 13.2.9ECh. 13 - Prob. 13.2.10ECh. 13 - Prob. 13.2.11ECh. 13 - Prob. 13.3.1ECh. 13 - Prob. 13.3.2ECh. 13 - Multiple-Choice Questions on Interim Reporting...Ch. 13 - Prob. 13.3.4ECh. 13 - Prob. 13.3.5ECh. 13 - Prob. 13.3.6ECh. 13 - Prob. 13.3.7ECh. 13 - Prob. 13.3.8ECh. 13 - Prob. 13.3.9ECh. 13 - Prob. 13.3.10ECh. 13 - LIFO Liquidation During July, Laesch Company,...Ch. 13 - Inventory Write-Down and Recovery Cub Company, a...Ch. 13 - MutiniedChoice Questions on Income Taxes at...Ch. 13 - Prob. 13.6.2ECh. 13 - Prob. 13.6.3ECh. 13 - MutiniedChoice Questions on Income Taxes at...Ch. 13 - Prob. 13.6.5ECh. 13 - Prob. 13.6.6ECh. 13 - Prob. 13.7ECh. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Prob. 13.11ECh. 13 - Prob. 13.12ECh. 13 - Prob. 13.13PCh. 13 - Prob. 13.14PCh. 13 - Interim Income Statement Chris Inc. has...Ch. 13 - Prob. 13.17PCh. 13 - Prob. 13.20PCh. 13 - Matching Terms Match the items in the left-hand...
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