XYZ is a Canadian - controlled public company. The company has a December 31 fiscal year...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
XYZ is a Canadian - controlled public company. The company has a December 31 fiscal year end. The company has a policy of using loss carrybacks in the earliest possible year. Data concerning the earnings of the company for 20x6 and 20x7 are as follows: 20x6 (95,000) 20x7 Earnings (loss) before income tax Amounts included in income 35,000 Investment income 1,250 1.750 Depreciation expense - equipment Depreciation expense - development costs Amounts deducted for income tax Capital Cost Allowance Development Expenditures 31,000 34.000 19,000 21.000 27,000 26,000 14,000 Income Tax Rate 37% 38% Other Information: Taxable income and the income tax rates for 20x2 through 20x5 are as follows: Taxable Income (loss) 7,500 Year Tax Rate 20x2 40% 20x3 20x4 20x5 12,500 8,000 (12,500) 40% 40% 41% 580,000 and UCC of At December 31 20x5, equipment had net book value of At December 31, 20x5, the SFP showed an unamortized balance of development costs of The investment income consists of dividends from taxable Canadian corporations 320.000 195,000 under 'other assets' 1. For each of 20x6, and 20x7, prepare the journal entry or entries to record income tax expense. Assume that management judges that it is probable that the full benefit of any tax loss carryforward will be realized within the carryforward. 2. Show how the deferred tax amounts would appear on the 20x6 year-end SFP 3. Supplose that the 20x7 management decided in 20x8 that it was probable that the company would only use tax loss carryforward. 9,000 of the remaining gross a. show the entry that would be made to reduce the carryforward benefit b. what impact would this entry have on the 20x8 financial statements? XYZ is a Canadian - controlled public company. The company has a December 31 fiscal year end. The company has a policy of using loss carrybacks in the earliest possible year. Data concerning the earnings of the company for 20x6 and 20x7 are as follows: 20x6 (95,000) 20x7 Earnings (loss) before income tax Amounts included in income 35,000 Investment income 1,250 1.750 Depreciation expense - equipment Depreciation expense - development costs Amounts deducted for income tax Capital Cost Allowance Development Expenditures 31,000 34.000 19,000 21.000 27,000 26,000 14,000 Income Tax Rate 37% 38% Other Information: Taxable income and the income tax rates for 20x2 through 20x5 are as follows: Taxable Income (loss) 7,500 Year Tax Rate 20x2 40% 20x3 20x4 20x5 12,500 8,000 (12,500) 40% 40% 41% 580,000 and UCC of At December 31 20x5, equipment had net book value of At December 31, 20x5, the SFP showed an unamortized balance of development costs of The investment income consists of dividends from taxable Canadian corporations 320.000 195,000 under 'other assets' 1. For each of 20x6, and 20x7, prepare the journal entry or entries to record income tax expense. Assume that management judges that it is probable that the full benefit of any tax loss carryforward will be realized within the carryforward. 2. Show how the deferred tax amounts would appear on the 20x6 year-end SFP 3. Supplose that the 20x7 management decided in 20x8 that it was probable that the company would only use tax loss carryforward. 9,000 of the remaining gross a. show the entry that would be made to reduce the carryforward benefit b. what impact would this entry have on the 20x8 financial statements?
Expert Answer:
Answer rating: 100% (QA)
1 2 The temporary differences 20X6 are all noncurrent As a result when the SFP is prepared they will ... View the full answer
Related Book For
Accounting Principles Volume 1
ISBN: 978-1119502425
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
Posted Date:
Students also viewed these accounting questions
-
Karsch Enterprises has a December 31 fiscal year end and uses straight-line amortization to the nearest month for its finite-life intangible assets . The company has provided you with the following...
-
Karsch Enterprises has a December 31 fiscal year end and uses straight-line amortization to the nearest month for its finite-life intangible assets . The company has provided you with the following...
-
Chandler Retail has a December 31 fiscal year end and the company sells more merchandise in November and December than in any other month. The company has a "no questions asked" policy in terms of...
-
The data file arch.gdt contain monthly stock price indices return of U.S. Nasdaq (NR). The data are recorded monthly beginning in 1988:01 and ending in 2015:12. Question 1. i) (Bonus) Consider the...
-
Into what languages do multinational companies translate their annual reports? Why?
-
You are going to use the methods discussed in this chapter to estimate the proportion of all cars in your area that are red. Stand on a busy street and count cars as they pass by. Count 100 cars and...
-
Attitudes about Auditors. The following three statements are representative of the attitudes and opinions sometimes encountered by professional auditors. 1 An audit by an independent auditor is...
-
Dance Creations manufactures authentic Hawaiian hula skirts that are purchased for traditional Hawaiian celebrations, costume parties, and other functions. During its first year of business, the...
-
Newlyweds Jamie Lee and Ross have had several milestones in the past year. They are newly married, recently purchased their first home, and now have twins on the way! Jamie Lee and Ross have to...
-
In this question, you will use the ID3 algorithm to create a decision tree for the dataset given below. There are three Boolean attributes X1, X2, and X3 and a Boolean class attribute. Be sure to...
-
What are some methods to mitigate risk during System Deployment?
-
How should a site survey be conducted?
-
List the decision rules the auditor can use in evaluating sample results.
-
Differentiate between an automatic controller and process controller.
-
What is System I&CO?
-
An electronics manufacturer produces a new gadget: Variable costs $30/unit, fixed costs $100,000, selling price $50/unit, expected sales volume 10,000 units. Requirements: Apply the revenue...
-
Show that, given a maximum flow in a network with m edges, a minimum cut of N can be computed in O(m) time.
-
Cecilia Hernandez earned $60,100 in 2018 and was paid monthly. She worked for HillSide Tours for all of 2018. Using the formulas, what were her CPP and EI deductions in (a) January 2018 (b) December...
-
Refer to the trial balance that follows for Edden Electrical for the year ended April 30, 2021. Instructions Use the trial balance to do the following: a. Prepare an income statement. b. Prepare a...
-
In this group activity, you will be provided with a skeleton classified balance sheet. Then, using the clues provided (including liquidity ratios) and the amounts from the statement, you will...
-
Interpret favorable variance (Learning Objective 5) Exhibit 10-20 shows that the Mexican sauces product line had a favorable marketing expense variance. Does this favorable variance necessarily mean...
-
Identify responsibility centers (Learning Objective 5) Fill in the blanks with the phrase that best completes the sentence. A cost center A responsibility center Lower An investment center A profit...
-
Prepare summary performance report (Learning Objective 1)} Hanna White owns a chain of travel goods stores. Last year, her sales staff sold 10,000 suitcases at an average sales price of \(\$ 150\)....
Study smarter with the SolutionInn App