Acct3021 Problem Set 5 My name Spring 2020 Chapter 19 Garnet Gold Company began operation on 1/1/20. Income and tax data follows: Income for book purposes $5,000,000 for each year Marginal tax rate 20% (for 2020-2024) Book/Tax differences: Garnet Gold violated environmental laws by discharging oil into navigable waters of the United States. A civil penalty of $2,000,000 was assessed against the corporation which was paid in 2020 A depreciable asset that cost $1,000,000 was purchased on 1/1/2020. The asset has an estimated useful life of five years and no residual value for book purposes. tax depreciation is as follows Year Depreciation 2020 $250,000 2021 $320,000 2022 $250,000 2023 $100,000 2024 $80,000 Garnet Gold is a defendant in a lawsuit. The company estimates that it will be forced to pay damages of $500,000. It accrued a lawsuit liability of $500,000 on 12/31/21 for book purposes. The expected final settlement date (payment) is 12/31/23. At that point, the expense will be tax deductible. Rent income collected in advance at 12/31/20 was $300,000 and will be reported as income across 2021 and 2022 (evenly) for books. For tax, prepaid rent income must be reported in the period collected GarnetGold sold a piece of property in 2020. A $800,000 gain on the sale was recognized for book purposes in 2020. The proceeds from the sale will be collected in equal installments between 2021 and 2024 resulting in a taxable gain of $200,000 each year. GarnetGold is required to report the income to the IRS when it receives the proceeds from the sale (i.e., it will recognize $200,000 each year from 2021 to 2024). Required Record the necessary journal entries for income tax payables, deferred tax assets and deferred tax liabilities and income tax expense for the years 2020 to 2024. Income Tax Payable Worksheet 2020 2021 2022 2023 2024 Total Book Income Permanent differences Temporary Differences Taxable Income 1 Tax Rate Income Taxes Payable Journal entries for 2020 through 2024 Year Account 2020 Debit Credit 2021 2022 2023 2024 30 Acct3021 Problem Set 5 My name Spring 2020 Chapter 19 Garnet Gold Company began operation on 1/1/20. Income and tax data follows: Income for book purposes $5,000,000 for each year Marginal tax rate 20% (for 2020-2024) Book/Tax differences: Garnet Gold violated environmental laws by discharging oil into navigable waters of the United States. A civil penalty of $2,000,000 was assessed against the corporation which was paid in 2020 A depreciable asset that cost $1,000,000 was purchased on 1/1/2020. The asset has an estimated useful life of five years and no residual value for book purposes. tax depreciation is as follows Year Depreciation 2020 $250,000 2021 $320,000 2022 $250,000 2023 $100,000 2024 $80,000 Garnet Gold is a defendant in a lawsuit. The company estimates that it will be forced to pay damages of $500,000. It accrued a lawsuit liability of $500,000 on 12/31/21 for book purposes. The expected final settlement date (payment) is 12/31/23. At that point, the expense will be tax deductible. Rent income collected in advance at 12/31/20 was $300,000 and will be reported as income across 2021 and 2022 (evenly) for books. For tax, prepaid rent income must be reported in the period collected GarnetGold sold a piece of property in 2020. A $800,000 gain on the sale was recognized for book purposes in 2020. The proceeds from the sale will be collected in equal installments between 2021 and 2024 resulting in a taxable gain of $200,000 each year. GarnetGold is required to report the income to the IRS when it receives the proceeds from the sale (i.e., it will recognize $200,000 each year from 2021 to 2024). Required Record the necessary journal entries for income tax payables, deferred tax assets and deferred tax liabilities and income tax expense for the years 2020 to 2024. Income Tax Payable Worksheet 2020 2021 2022 2023 2024 Total Book Income Permanent differences Temporary Differences Taxable Income 1 Tax Rate Income Taxes Payable Journal entries for 2020 through 2024 Year Account 2020 Debit Credit 2021 2022 2023 2024 30