Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ayayai Inc. has two temporary differences at the end of 2016. The first difference stems from installment sales, and the second one results from the

Ayayai Inc. has two temporary differences at the end of 2016. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Ayayais accounting department has developed a schedule of future taxable and deductible amounts related to these temporary differences as follows.

2017

2018

2019

2020

Taxable amounts

$36,500

$52,200

$63,200

$73,600

Deductible amounts

(15,500

)

(19,900

)

$36,500

$36,700

$43,300

$73,600

As of the beginning of 2016, the enacted tax rate is 34% for 2016 and 2017, and 38% for 20182021. At the beginning of 2016, the company had no deferred income taxes on its balance sheet. Taxable income for 2016 is $452,000. Taxable income is expected in all future years.

A) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016.

B) Indicate how deferred income taxes would be classified on the balance sheet at the end of 2016.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

DCAA Contract Audit Manual Volume 1

Authors: Defense Contract Audit Agency

1st Edition

B08HTL19V5, 979-8684992995

More Books

Students also viewed these Accounting questions

Question

Define project quality.

Answered: 1 week ago