ACCT 001 Lecture Notes - Lecture 3: Deferred Tax, Book Value

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skywildebeest596

21 Jun 2020

School

College of The Sequoias

Department

Accounting (ACCT)

Course

ACCT 001

Professor

Cooper

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Document Summary

The differences between the carrying amount of an asset or liability in the statement of financial position and its tax base. Which result in taxable amounts in future periods when the carrying. Deductible temporary differences amount of the asset or liability is recovered or settled. Which result in amounts that are deductible in future periods when the carrying amount of the asset or liability is recovered or settled. The company will pay more tax in future periods. The company will pay less tax in future periods. Certain temporary differences are excluded from being recognised. Aasb 112 prohibits temporary differences being recognised in relation to: Buildings that are not deductible for tax. The carrying amounts of an entity"s assets and liabilities are different from the amounts that would arise if a balance sheet was prepared for tax authorities. Carrying amount (ca) = asset and liability balances (net of accum depn, allowances) based on accounting balance sheet.

Related Questions

Information for Entity A for the year ended December 31, 2018 ($ in millions):

Income from continuing operations before tax	$160
Temporary differences (all related to operating income):
Accrued warranty expense in excess of expense included in operating income	12
Depreciation deducted on tax return in excess of depreciation expense	32
Permanent differences (all related to operating income):
Nondeductible portion of entertainment expense	8
Interest received on municipal bonds	3
Balance in deferred tax asset account, January 1, 2018	1
Balance in deferred tax liability account, January 1, 2018	2
The applicable enacted tax rate for all periods is 40%.

Show work.

A. Prepare the appropriate journal entry to record income taxes.

B. What is Entity A's net income?

C. Sometimes a temporary difference will produce future deductible amounts. Explain what is meant by future deductible amounts. Describe at least one situation that has this effect, for example, one example is when rent revenue is collected in advance from tenants (deferred rent revenue for financial accounting purposes) but will be recognized as the tenants occupy the property. You can think of others. How are future deductible amounts recognized in the financial statements? As between deferred tax assets and deferred tax liabilities, which would management prefer and why?

fuchsiaclam765

I have a question. I got right Deferred Tax Asset and $12,350Income Tax Payable $173,740 but I got wrong Income Tax Expense andDeferred tax liability.
Bridgeport Inc. has two temporary differences at the end of 2016.The first difference stems from installment sales, and the secondone results from the accrual of a loss contingency. Bridgeportâsaccounting department has developed a schedule of future taxableand deductible amounts related to these temporary differences asfollows.

	2017	2018	2019	2020
Taxable Amounts	42,700	45,900	64,300	81,400
Deductible Amounts		(13,600)	(18,900)
TOTALS	42,700	32,300	45,400	81,400

As of the beginning of 2016, the enacted tax rate is 34% for2016 and 2017, and 38% for 2018â2021. At the beginning of 2016, thecompany had no deferred income taxes on its balance sheet. Taxableincome for 2016 is $511,000. Taxable income is expected in allfuture years.

Prepare the journal entry to record income tax expense, deferredincome taxes, and income taxes payable for 2016.

blackelephant991

Four independent situations are described below. Each involvesfuture deductible amounts and/or future taxable amounts produced bytemporary differences:

	($ in thousands)
	Situation

	1		2		3		4
Taxable income	$	145	$	335	$	345		$440
Future deductibleamounts		30				35		35
Future taxableamounts				30		30		60
Balance(s) atbeginning of the year:
Deferred tax asset		5				24		10
Deferred tax liability				5		5