The differences between the book basis and tax basis of the assets and liabilities of Castle Corporation
Question:
The differences between the book basis and tax basis of the assets and liabilities of Castle Corporation at the end of 2019 are presented below.
It is estimated that the litigation liability will be settled in 2020. The difference in accounts receivable will result in taxable amounts of $30,000 in 2020 and $20,000 in 2021. The company has taxable income of $350,000 in 2019 and is expected to have taxable income in each of the following 2 years. Its enacted tax rate is 34% for all years. This is the company?s first year of operations. The operating cycle of the business is 2 years.
Instructions
a. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2019.
b. Indicate how deferred income taxes will be reported on the balance sheet at the end of 2019.
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
a Income Tax Expense 125800 Deferred Tax Asset 10200 Income Taxes Payable 119000 Deferred Tax Liabil...View the full answer
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
