What is true when income for tax purposes is higher thanaccounting income?
â Actual income taxes payable will be the same as accountingincome tax expense
â Actual income taxes payable will be higher that accountingincome tax expense
â Actual income taxes payable will be lower than accountingincome tax expense
â Actual income taxes expense is the same as actual income taxpayable
What is true when income for tax purposes is higher thanaccounting income?
â Actual income taxes payable will be the same as accountingincome tax expense
â Actual income taxes payable will be higher that accountingincome tax expense
â Actual income taxes payable will be lower than accountingincome tax expense
â Actual income taxes expense is the same as actual income taxpayable
Related questions
Zekany Corporation would have had identical income beforetaxes on both its income tax returns and income statements for theyears 2013 through 2016 except for differences in depreciation onan operational asset. The asset cost $250,000 and is depreciatedfor income tax purposes in the following amounts: |
| 2013 | $ | 82,500 | |
| 2014 | 110,000 | ||
| 2015 | 37,500 | ||
| 2016 | 20,000 | ||
The operational asset has afour-year life and no residual value. The straight-line method isused for financial reporting purposes. |
Income amounts beforedepreciation expense and income taxes for each of the four yearswere as follows. |
| 2013 | 2014 | 2015 | 2016 | |||||||||
| Accountingincome before taxes and depreciation | $ | 135,000 | $ | 155,000 | $ | 145,000 | $ | 145,000 | ||||
Assume the average and marginal income tax rate for 2013and 2014 was 30%; however, during 2014 tax legislation was passedto raise the tax rate to 40% beginning in 2015. The 40% rateremained in effect through the years 2015 and 2016. Both theaccounting and income tax periods end December 31. |
| Required: |
Prepare the journal entries to record income taxes for theyears 2013 through 2016. (If no entry is required for aparticular transaction, select "No journal entry required" in thefirst account field.) |
The following information is available for Windsor Corporation for 2016 (its first year of operations).
| 1, | Excess of tax depreciation over book depreciation, $43,800. This $43,800 difference will reverse equally over the years 2017â2020. | |
| 2. | Deferral, for book purposes, of $18,100 of rent received in advance. The rent will be recognized in 2017. | |
| 3. | Pretax financial income, $302,100. | |
| 4. | Tax rate for all years, 30%. |
a) Compute taxable income for 2016.
Taxable Income $____
b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016.
c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, assuming taxable income of $309,200.
Alsup Consulting sometimes performs services for which itreceives payment at the conclusion of the engagement, up to sixmonths after services commence. Alsup recognizes service revenuefor financial reporting purposes when the services are performed.For tax purposes, revenue is reported when fees are collected.Service revenue, collections, and pretax accounting income for2015â2018 are as follows: |
| Service Revenue | Collections | Pretax Accounting Income | |||||||
| 2015 | $ | 741,000 | $ | 716,000 | $ | 290,000 | |||
| 2016 | 850,000 | 855,000 | 355,000 | ||||||
| 2017 | 815,000 | 795,000 | 325,000 | ||||||
| 2018 | 800,000 | 820,000 | 305,000 | ||||||
There are no differences betweenaccounting income and taxable income other than the temporarydifference described above. The enacted tax rate for each year is40%. |
(Hint: You may find it helpful to prepare a schedule that showsthe balances in service revenue receivable at December 31,2015â2018.) |
| Required: |
| 1. | Prepare the appropriate journal entry to record Alsup's 2016income taxes, Alsupâs 2017 income taxes and Alsupâs 2018 incometaxes. (If no entry is required for a transaction/event,select "No journal entry required" in the first account field.Enter your answers in thousands.) |
