3. GT INC.âs net income before tax on its financial statementswas $700,000 and its taxable income was $810,000. The $110,000difference is the aggregate of temporary book tax differences. GTâstax rate is 34 percent. a) Compute GTâs tax expense for financialstatement purposes. b) Compute GTâs tax payable. c) Compute the netincrease in GTâs deferred tax assets or deferred tax liabilities(identify which) for the year.
3. GT INC.âs net income before tax on its financial statementswas $700,000 and its taxable income was $810,000. The $110,000difference is the aggregate of temporary book tax differences. GTâstax rate is 34 percent. a) Compute GTâs tax expense for financialstatement purposes. b) Compute GTâs tax payable. c) Compute the netincrease in GTâs deferred tax assets or deferred tax liabilities(identify which) for the year.
Related questions
Lee Limited has the followinginformation for the year ending 31 March 2013:
Current tax payable is $39,950 during the year.
Profit before tax is $150,000 during the year. This amountincludes an interest income of $5,000 from Government Bonds. Theinterest income is never taxable for tax purposes.
As at 31 March 2013, total deferred tax assets were $3,250 andtotal deferred tax liabilities were $9,500 (i.e., closingbalances).
As at 31 March 2012, total deductible temporary differences were$8,000 and total taxable temporary differences were $28,000.
All the changes in deferred tax assets and deferred taxliabilities are related to tax expenses.
The tax rate changed from 30% to 28% at the beginning of thecurrent financial year (1 April 2012).
REQUIRED:
In accordance with NZ IAS 12, calculate Lee Limitedâs deferredtax assets and liabilities by completing the attached excelworksheet (WORKSHEET 2), and provide the journal entries to accountfor its current tax and deferred tax.
(5 marks)
Prepare the income statement extract to show how to disclose thetax expense for the year ending 31 March 2013 for Lee Limited.
(2 marks)
Prepare a numerical reconciliation between Lee Limitedâsreported tax expense and its expected tax expense (i.e., theproduct of accounting profit before tax multiplied by theapplicable tax rate).
Lee Limited, worksheet to calculate deferred tax assetsand deferred tax liabilities | ||
DTA | DTL | |
Closing balances of DTA and DTL | ||
Less: Beginning balances of DTA and DTL (at 30% rate) | ||
Adjust for: Movements during the year related to rate change | ||
Adjust for: Movements during the year related to equity accountif any | ||
Remaining Adjustments to be made in journal entry | ||
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.
