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Brief Exercise 19-2 Stellar Corporation began operations in 2017 and reported pretax financial income of $215,000 for the year. Stellar's tax depreciation exceeded its book depreciation by $36,000. Stellar's tax rate for 2017 and years thereafter is 40%. In its December 31, 2017, balance sheet, what amount of deferred tax liability should be reported? $ Deferred tax liability to be reported Brief Exercise 19-6 At December 31, 2017, Novak Inc. had a deferred tax asset of $32,600. At December 31, 2018, the deferred tax asset is $56,800. The corporation's 2018 current tax expense is $57,000. What amount should Novak report as total 2018 income tax expense? $ Total income tax expense for 2018 Brief Exercise 19-11 At December 31, 2017, Flint Corporation had a deferred tax liability of $803,400, resulting from future taxable amounts of $2,060,000 and an enacted tax rate of 39%. In May 2018, a new income tax act is signed into law that raises the tax rate to 45% for 2018 and future years. Prepare the journal entry for Flint to adjust the deferred tax liability. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Brief Exercise 19-14 Sandhill Inc. incurred a net operating loss of $480,000 in 2017. Combined income for 2015 and 2016 was $325,000. The tax rate for all years is 30%. Sandhill elects the carryback option. Assume that it is more likely than not that the entire net operating loss carryforward will not be realized in future years. Prepare all the journal entries necessary at the end of 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (To record carryback.) (To record carryforward.) (To record allowance.) Exercise 19-8 (Part Level Submission) Bonita Company has the following two temporary differences between its income tax expense and income taxes payable. 2017 Pretax financial income Excess depreciation expense on tax return Excess warranty expense in financial income Taxable income The income tax rate for all years is 40%. $820,000 (28,700) 19,000 $810,300 2018 $866,000 (40,100) 10,200 $836,100 2019 $952,000 (10,300) 7,600 $949,300 (a) Assuming there were no temporary differences prior to 2017, prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit 2017 2018 2019 Credit Exercise 19-17 Carla Co. establishes a $146,000,000 liability at the end of 2017 for the estimated site-cleanup costs at two of its manufacturing facilities. All related closing costs will be paid and deducted on the tax return in 2018. Also, at the end of 2017, the company has $73,000,000 of temporary differences due to excess depreciation for tax purposes, $10,220,000 of which will reverse in 2018. The enacted tax rate for all years is 40%, and the company pays taxes of $93,440,000 on $233,600,000 of taxable income in 2017. Carla expects to have taxable income in 2018. Determine the deferred taxes to be reported at the end of 2017. $ Deferred tax assets $ Deferred tax liabilities SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Indicate how the deferred taxes computed above are to be reported on the balance sheet. Carla Co. Balance Sheet $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Assuming that the only deferred tax account at the beginning of 2017 was a deferred tax liability of $14,600,000, draft the income tax expense portion of the income statement for 2017, beginning with the line \"Income before income taxes.\" (Hint: You must first compute (1) the amount of temporary difference underlying the beginning $14,600,000 deferred tax liability, then (2) the amount of temporary differences originating or reversing during the year, and then (3) the amount of pretax financial income.) Carla Co. Income Statement (Partial) $ $ $ Click if you would like to Show Work for this question: Open Show Work Exercise 19-20 (Part Level Submission) The differences between the book basis and tax basis of the assets and liabilities of Coronado Corporation at the end of 2016 are presented below. Book Basis Accounts receivable Litigation liability $53,400 32,000 Tax Basis $0 0 It is estimated that the litigation liability will be settled in 2017. The difference in accounts receivable will result in taxable amounts of $27,800 in 2017 and $25,600 in 2018. The company has taxable income of $325,000 in 2016 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. (a) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Exercise 19-24 (Part Level Submission) Buffalo Inc. reports the following pretax income (loss) for both book and tax purposes. (Assume the carryback provision is used where possible for a net operating loss.) Year 2015 Pretax Income (Loss) Tax Rate $121,000 40 % 2016 93,000 40 % 2017 (287,000 ) 45 % 2018 129,000 45 % The tax rates listed were all enacted by the beginning of 2015. (a) Prepare the journal entries for years 2015-2018 to record income tax expense (benefit) and income taxes payable (refundable), and the tax effects of the loss carryback and loss carryforward, assuming that based on the weight of available evidence, it is more likely than not that one-half of the benefits of the loss carryforward will not be realized. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Dat Account Titles and e Explanation 201 5 201 6 201 7 (To record refund.) (To record allowance.) 201 8 (To record income taxes.) (To adjust allowance.) Debit Credit Question 16 Given the following items and amounts, compute the actual return on plan assets: fair value of plan assets at the beginning of the period $9,470,000; benefits paid during the period $1,320,000; contributions made during the period $950,000; and fair value of the plan assets at the end of the period $10,050,000. $ Actual return on plan assets Brief Exercise 20-1 AMR Corporation (parent company of American Airlines) reported the following (in millions). Service cost Interest on P.B.O. Return on plan assets Amortization of prior service cost Amortization of net loss $366 737 593 13 154 Compute AMR Corporation's pension expense. (Enter answer in millions.) $ Pension expense millions Brief Exercise 20-5 Sage Corporation amended its pension plan on January 1, 2017, and granted $145,530 of prior service costs to its employees. The employees are expected to provide 1,890 service years in the future, with 350 service years in 2017. Compute prior service cost amortization for 2017. $ Prior service cost amortization for 2017 Brief Exercise 20-6 At December 31, 2017, Flint Corporation had a projected benefit obligation of $606,100, plan assets of $337,100, and prior service cost of $129,800 in accumulated other comprehensive income. Determine the pension asset/liability at December 31, 2017. (Enter liability using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Pension asset/liability at December 31, 2017 $ Brief Exercise 20-8 Oriole Corporation has the following balances at December 31, 2017. Projected benefit obligation Plan assets at fair value Accumulated OCI (PSC) $2,814,000 2,230,000 1,197,000 What is the amount for pension liability that should be reported on Oriole's balance sheet at December 31, 2017? $ Pension liability balance at December 31, 2017 Brief Exercise 20-10 Swifty Corp. has three defined benefit pension plans as follows. Pension Assets (at Fair Value) Plan X Plan Y Plan Z $543,000 959,000 543,000 Projected Benefit Obligation $511,000 737,000 703,000 How will Swifty report these multiple plans in its financial statements? $ Pension Asset $ Pension Liability Click if you would like to Show Work for this question: Open Show Work Brief Exercise 20-11 Sheffield Corporation has the following information available concerning its postretirement benefit plan for 2017. Service cost $41,900 Interest cost Actual and expected return on plan assets 49,300 29,600 Compute Sheffield's 2017 postretirement expense. $ Postretirement expense 2017 Exercise 20-3 (Part Level Submission) Blossom Company provides the following information about its defined benefit pension plan for the year 2017. Service cost Contribution to the plan Prior service cost amortization Actual and expected return on plan assets Benefits paid Plan assets at January 1, 2017 Projected benefit obligation at January 1, 2017 Accumulated OCI (PSC) at January 1, 2017 Interest/discount (settlement) rate $91,300 102,900 9,500 64,800 39,400 648,700 694,400 150,900 9% (a) Prepare a pension worksheet inserting January 1, 2017, balances, showing December 31, 2017. (Enter all amounts as positive.) Items Balanc e, January 1, 2017 Annual Pension Expense $ BLOSSOM COMPANY Pension Worksheet2017 General Journal Entries OCI Pension Prior Service Asset/ Cash Cost Liability $ $ $ Memo Record Projected Benefit Plan Obligation Assets $ $ Service cost Interest cost Actual return Amortiz ation of PSC Contrib utions Benefit s Journal $ $ entry for 2017 Accum ulated OCI, Dec. 31, 2016 Balanc $ e, Dec. 31, 2017 Click if you would like to Show Work for this question: $ $ $ Open Show Work Exercise 20-11 (Part Level Submission) Marin Company sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2017 in which no benefits were paid. 1 . 2 . 3 . The actuarial present value of future benefits earned by employees for services rendered in 2017 amounted to $56,400. The company's funding policy requires a contribution to the pension trustee amounting to $144,392 for 2017. As of January 1, 2017, the company had a projected benefit obligation of $898,800, an accumulated benefit obligation of $803,800, and a debit balance of $398,900 in accumulated OCI (PSC). The fair value of pension plan assets amounted to $601,100 at the beginning of the year. The actual and expected return on plan assets was $54,200. The settlement rate was 9%. No gains or losses occurred in 2017 and no benefits were paid. 4 Amortization of prior service cost was $50,400 in 2017. Amortization of net gain or loss was . not required in 2017. (a) Determine the amounts of the components of pension expense that should be recognized by the company in 2017. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Components of Pension Expense $ $ Exercise 20-19 Buffalo Co. provides the following information about its postretirement benefit plan for the year 2017. Service cost Contribution to the plan Actual and expected return on plan assets Benefits paid Plan assets at January 1, 2017 Accumulated postretirement benefit obligation at January 1, 2017 Discount rate Compute the postretirement benefit expense for 2017. $ Postretirement benefit expense $ 41,400 9,600 9,900 21,600 117,600 315,500 8% Exercise 20-21 Grouper Inc. provides the following information related to its postretirement benefits for the year 2017. Accumulated postretirement benefit obligation at January 1, 2017 Actual and expected return on plan assets Prior service cost amortization Discount rate Service cost $666,200 33,700 21,200 11 % 83,400 Compute postretirement benefit expense for 2017. $ Postretirement benefit expense Exercise 20-23 Marigold Co. provides the following information about its postretirement benefit plan for the year 2017. Service cost Prior service cost amortization Contribution to the plan Actual and expected return on plan assets Benefits paid Plan assets at January 1, 2017 Accumulated postretirement benefit obligation at January 1, 2017 Accumulated OCI (PSC) at January 1, 2017 Discount rate $ 81,300 2,800 55,700 68,100 43,800 703,800 747,500 92,800 Dr. 10 % Prepare a worksheet inserting January 1, 2017, balances, showing December 31, 2017, balances, and the journal entry recording postretirement benefit expense. (Enter all amounts as positive.) MARIGOLD CO. Postretirement Benefit Worksheet2017 General Journal Entries Items Annual Postretireme nt Expense Cash OCIPrior Service Cost Postretirement Asset/ Liability Memo Record APBO Plan Assets $ $ $ $ $ $ $ $ $ Balance , Jan. 1, 2017 Service cost Interest cost Actual return Contrib utions Benefit s Amortiz ation of PSC Journal $ $ entry for 2017 Accumu lated OCI, Dec. 31, 2016 Balance $ , Dec. 31, 2017 Click if you would like to Show Work for this question: Open Show Work