Question
1)A Corporation reports an account receivable for financial reporting purposes but not for tax purposes at fiscal year-end of December 31, 2020. When this asset
1)A Corporation reports an account receivable for financial reporting purposes but not for tax purposes at fiscal year-end of December 31, 2020. When this asset is recovered in 2021, a future taxable amount will occur and
pretax financial income will exceed taxable income in 2021. | ||
The company will record a decrease in a deferred tax liability in 2021. | ||
total income tax expense for 2021 will exceed current tax expense for 2021. | ||
The company will record an increase in a deferred tax asset in 2021. |
2)The deferred tax expense is the
increase in balance of deferred tax asset minus the increase in balance of deferred tax liability. | ||
increase in balance of deferred tax liability minus the increase in balance of deferred tax asset. | ||
increase in balance of deferred tax asset plus the increase in balance of deferred tax liability. | ||
decrease in balance of deferred tax asset minus the increase in balance of deferred tax liability.
|
3)When a firm reports a nondeductible fine as an expense they calculate income tax expense as:
pre-tax book income multiplied by the income tax rate. | ||
pre-tax book income plus the fine amount multiplied by the income tax rate. | ||
pre-tax book income less the fine amount multiplied by the income tax rate. |
4)
BestBuy Inc. reports pretax book income amounting to $300 million for installment sales on their 2014 income statement. $160 million worth of the installment sales were sold on account during 2014 and will be collected in cash in 2015. The remainder of the installment sales were paid in full by the end of 2014. The tax rate for 2014 is 35%.
Based on this information, what is the journal entry to be made on December 31, 2014 to record taxes? In your answer separate out current and deferred tax expense.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started