Question
At the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of
At the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of a liability account for estimated expenses and its tax base. Taxable income is $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 35%.
Required:
Prepare the journal entry(s) to record income taxes during the period. (4 marks)
ANSWER a):
How much will income tax expense be shown in the income statement? (1 mark)
ANSWER b):
At the end of the year, a deductible temporary difference of $40 million has been recognised due to the difference between the carrying amount of a liability account for estimated expenses and its tax base. Taxable income is $50 million. No temporary differences existed at the beginning of the year, and the tax rate is 35%.
Required:
Prepare the journal entry(s) to record income taxes during the period. (4 marks)
ANSWER a):
How much will income tax expense be shown in the income statement? (1 mark)
ANSWER b):
What will be the balance sheet disclosure during the period regarding taxes? (2 marks)
ANSWER c):
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Accounting Principles Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
9th Canadian Edition
978-1119786818, 1119786819
