Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 8, Problem 8.10BE
LIFO liquidation
• LO8–6
Refer to the situation described in BE 8–8. Assuming an income tax rate of 40%, what is LIFO liquidation profit or loss that the company would report in a disclosure note accompanying its financial statements?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Question 11: The taxable earnings threshold over which FUTA tax is not levied is:
Answer:
A.
O S7,000
В.
O $142,800
С.
S200,000
D.
S250,000
Intermediate Accounting ll ch 16
6. The information that follows pertains to Richards Refrigeration, Incorporated:
At December 31, 2024, temporary differences existed between the financial statement book values and the tax bases of the following:
($ in millions)
Book Value
Tax Basis
Future Taxable (Deductible) Amount
Buildings and equipment (net of accumulated depreciation)
$ 120
$ 90
$ 30
Prepaid insurance
50
0
50
Liability-Loss contingency
25
0
(25)
No temporary differences existed at the beginning of 2024.
Pretax accounting income was $200 million and taxable income was $145 million for the year ended December 31, 2024. The tax rate is 25%.
Required:
Complete the following table given below and prepare the appropriate journal entry to record income taxes for 2024.
What is the 2024 net income?
General Journal
Record 2024 income taxes
Transaction
General Journal
Debit
Credit
1
Problem 16-6 (IAA)
Complex Company reported the following information
relating to income before tax for accounting purposes:
2021
2022
2023
2024
Income tax rate
In 2021, the entity recognized doubtful accounts of P100,000.
The doubtful accounts were considered worthless or
uncollectible in 2022.
2,000,000
3,000,000
4,000,000
5,000,000
25%
Analysis of the tax and book records disclosed P120,000 in
unearned rent income on December 31, 2021 that had been
recognized as taxable income in 2021 when the cash was received.
Also on December 31, 2021, estimated warranty cost of
P300,000 had been recognized as expense on the books in
2021 when the product sales were made but is not deductible
for tax purposes until paid.
The unearned rent income on December 31, 2021 was
realized and the actual warranty payments were made in
the following years:
Rent income per book Actual warranty payments
40,000
40,000
40,000
2022'
2023
2024
20,000
80,000
200,000
Required:
1. Prepare journal entries for 2021,…
Chapter 8 Solutions
Intermediate Accounting, 10 Ed
Ch. 8 - Describe the three types of inventory of a...Ch. 8 - What is the main difference between a perpetual...Ch. 8 - The Cloud Company employs a perpetual inventory...Ch. 8 - The Bockner Company shipped merchandise to Laetner...Ch. 8 - What is a consignment arrangement? Explain the...Ch. 8 - Prob. 8.6QCh. 8 - The Esquire Company employs a periodic inventory...Ch. 8 - Prob. 8.8QCh. 8 - Its common in the electronics industry for unit...Ch. 8 - Explain why proponents of LIFO argue that it...
Ch. 8 - Prob. 8.11QCh. 8 - Describe the ratios used by financial analysts to...Ch. 8 - Prob. 8.13QCh. 8 - Prob. 8.14QCh. 8 - The Austin Company uses the dollar-value LIFO...Ch. 8 - Identify any differences between U.S. GAAP and...Ch. 8 - Determining ending inventory; periodic system ...Ch. 8 - Prob. 8.2BECh. 8 - LIFO method LO84 AAA Hardware uses the LIFO...Ch. 8 - LIFO liquidation LO86 Refer to the situation...Ch. 8 - Prob. 8.11BECh. 8 - Perpetual inventory system; journal entries LO81...Ch. 8 - Prob. 8.2ECh. 8 - Perpetual and periodic inventory systems compared ...Ch. 8 - Prob. 8.5ECh. 8 - Physical quantities and costs included in...Ch. 8 - FASB codification research LO82, LO83 Access the...Ch. 8 - Prob. 8.13ECh. 8 - Prob. 8.14ECh. 8 - Prob. 8.15ECh. 8 - Prob. 8.16ECh. 8 - Prob. 8.19ECh. 8 - Prob. 8.20ECh. 8 - Prob. 8.21ECh. 8 - Prob. 8.23ECh. 8 - Prob. 8.25ECh. 8 - Prob. 8.30ECh. 8 - Prob. 8.31ECh. 8 - Various inventory transactions; journal entries ...Ch. 8 - Prob. 8.3PCh. 8 - Prob. 8.4PCh. 8 - Various inventory costing methods LO81, LO84...Ch. 8 - Prob. 8.6PCh. 8 - Prob. 8.9PCh. 8 - Prob. 8.16PCh. 8 - Prob. 8.1DMPCh. 8 - Real World Case 82 Physical quantities and costs...Ch. 8 - Prob. 8.4DMPCh. 8 - Prob. 8.5DMPCh. 8 - Prob. 8.8DMPCh. 8 - Real World Case 89 Effects of inventory valuation...Ch. 8 - Communication Case 810 Dollar-value LIFO method ...Ch. 8 - Prob. 1CCTCCh. 8 - Prob. 2CCTC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 4G E 10:12 O O & 01:57:55 Remaining Multiple Choice FU Corporation is an exempt BMBE taxpayer in 2020 but became a taxable regular income taxpayer in 2021. It deducted P160,000 bad debt expense in 2020. In 2021, it recovered P30,000 out of the bad debts. Net income before bad debts in 2020 is P100,000 while net income before bad debts in 2021 amounted to 130,000. Compute for the net income in 2021. P100,000 P130,000 P160,000 P190,000 25 of 60arrow_forward#52 Which of the following disclosures is required for a change from LIFO to FIFO? Question 52 options: a The cumulative effect on prior years, net of tax, in the current retained earnings statement b Restated prior year income statements c The justification for the change d All of these are required.arrow_forwardR S4 OH2 Required Information Nevertheless The FASB requires that income statement recognition of gains and losses from cither source be delayed Politically acceptable approach 0:00 /6:56 720p 1x CC Knowledge Check 01 Calder Company has a defined benefit pension plan. Pension-related data for the current calendar year are shown below: 12 years Average remaining service period of active employees Net gain, January 1 PBO, January 1 Plan assets, January 1 009 1,930,000 What is the amount of the amortization of the net loss or gain that should be included as a component of pension expense for the current year? Amortization of net gain Next > %24 F6 F4 F5 F3 F2 %23 8. 9 L 1. H.arrow_forward
- E 16-7 Temporary difference; future deductible amounts; taxable income given LO16-3 Lance Lawn Services reports warranty expense by estimating the amount that eventually will be paid to satisfy warranties on its product sales. For tax purposes, the expense is deducted when the warranty work is completed. At December 31, 2024, Lance has a warranty liability of $2 million and taxable income of $75 million. At December 31, 2023, Lance reported a deferred tax asset of $435,000 related to this difference in reporting warranties; it's only temporary difference. The enacted tax rate is 25% each year. Required: Prepare the appropriate journal entry to record Lance's income tax provision for 2024.arrow_forwardProblem 15-58 (LO 15-6) In each of the following independent cases for tax year 2022, determine the amount of business interest expense deduction and disallowed interest expense carryforward, if any. Assume that average annual gross receipts exceed $27 million. Required: a. Company A has ATI of $70,000 and business interest expense of $20,000. b. Company B has ATI of $90,000, business interest expense of $50,000, and business interest income of $2,000. c. Company C has taxable income of $50,000 which includes business interest expense of $90,000 and depreciation of $20,000. Note: For all requirements, leave no cells blank - be certain to enter "0" wherever required. Enter your answers in dollar values not in million of dollars. a. Company A b. Company B c. Company C Interest expense deduction Disallowed interest expense carryforwardarrow_forward7 Explain how the CECL model (introduced in ASU No. 2016-13 and required in 2020) differs from current GAAPin its calculation of bad debt expensearrow_forward
- LO.2 Oak Corporation has the following general business credit carryovers. If the general business credit generated by activities during 2019 equals 36,000 and the total credit allowed during the current year is 60,000 (based on tax liability), what amounts of the current general business credit and carryovers are utilized against the 2019 income tax liability? What is the amount of unused credit carried forward to 2020?arrow_forwardD42 Enter X 21 Gross FUTA Tax DUE 22 23 Problem 4 24 25 26 27 28 29 30 Total Futa Taxable Wages 31 Credit against FUTA (assume applicable) 32 33 34 Problem 5 35 36 37 38 39 40 Gross FUTA Tax DUE 41 Credit against FUTA (assume applicable) 42 NET FUTA tax: With the following data, compute the Credit against FUTA: (assume applicable as well as the Maximum Credit allowed). Esc B With the following data, compute the NET FUTA Tax. Instructions Accessibility: Good to go ☆ Type here to search F1 fx 3650 Problem 1 4₁ @ 2 F2 # F3 Problems 2-5 3 $ 127,000 (c) $ Ş ZI -¤- CỌ: C (b) 6,750 3,100 (d) 3650 $ O E F4 4 F5 % 5 F6 8 AS b F7arrow_forwardProblem 6-55 (LO. 3) For 2021, MSU Corporation has $500,000 of adjusted taxable income, $22,000 of business interest income, and $120,000 of business interest expense. It has average annual gross receipts of more than $26,000,000 over the prior three taxable years. a. What is MSU's interest expense deduction for 2021?$fill in the blank 1 b. How much interest expense can be deducted for 2021 if MSU's adjusted taxable income is $300,000?$fill in the blank 2arrow_forward
- Intermediate Accounting 105 May I please have a GAAP explanation, along with examples providing concepts? Under what conditions should a short-term obligation be excluded from current liabilities? Thank you so mucharrow_forward4... 4 Sunland Company has the following two temporary differences between its income tax expense and income taxes payable. 2020 2021 2022 Pretax financial income $842,000 $956,000 $914,000 Excess depreciation expense on tax return (28,800 ) (39,300 ) (9,900 ) Excess warranty expense in financial income 20,400 9,500 7,600 Taxable income $833,600 $926,200 $911,700 The income tax rate for all years is 20%. (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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit 2020…arrow_forwardProblem 16-7 (Static) Multiple differences; calculate taxable income; balance sheet classification; financial statement effects [LO16-2, 16-3, 16-5, 16-8] Sherrod, Incorporated, reported pretax accounting income of $76 million for 2024. The following information relates to differences between pretax accounting income and taxable income: a. Income from installment sales of properties included in pretax accounting income in 2024 exceeded that reported for tax purposes by $3 million. The installment receivable account at year-end 2024 had a balance of $7 million (representing portions of 2023 and 2024 installment sales), expected to be collected equally in 2025 and 2026. b. Sherrod was assessed a penalty of $2 million by the Environmental Protection Agency for violation of a federal law in 2024. The fine is to be paid in equal amounts in 2024 and 2025. c. Sherrod rents its operating facilities but owns one asset acquired in 2023 at a cost of $80 million. Depreciation is reported by the…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
What is liquidity?; Author: The Finance Storyteller;https://www.youtube.com/watch?v=XtjS7CfUSsA;License: Standard Youtube License