Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bramble Inc. reported the following accounting income (loss) and related tax rates during the years 2015 to 2021: Accounting Tax Year Income (Loss) Rate 2015

Bramble Inc. reported the following accounting income (loss) and related tax rates during the years 2015 to 2021:

Accounting Tax
Year Income (Loss) Rate
2015 $72,000 25%
2016 25,000 25%
2017 58,000 25%
2018 79,000 30%
2019 (212,000 ) 35%
2020 73,000 30%
2021 85,000 25%

Accounting income (loss) and taxable income (loss) were the same for all years since Bramble began business. The tax rates from 2018 to 2021 were enacted in 2018. Assume Bramble Inc. follows ASPE for all parts of this question, except when asked about the effect of reporting under IFRS in part (b).

Prepare the journal entries to record income taxes for the years 2019 to 2021. Assume that Bramble uses the carryback provision where possible and expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year. (Credit account titles are automatically indented when the 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.)

Show how the bottom portion of the income statement would be reported in 2019, beginning with Loss before income tax. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Show how the bottom portion of the income statement would be reported in 2020, starting with Income before income tax. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Prepare the journa

Assume now that Bramble uses a valuation allowance account along with its Future Tax Asset account. Identify which entries in the previous part of the question would differ and prepare them. (Credit account titles are automatically indented when the 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.) Indicate how the bottom portion of the income statements for 2019 and 2020 would be reported. Assume that Bramble uses the carryback provision where possible but is uncertain if it will realize the benefits of any loss carryforward in the future. Bramble does not use a valuation allowance. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)l entries for the years 2019 to 2021 to record income taxes, assuming that Bramble uses the carryback provision where possible but is uncertain if it will realize the benefits of any loss carryforward in the future. Bramble does not use a valuation allowance. (Credit account titles are automatically indented when the 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.)

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

Step: 3

blur-text-image

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

Financial Accounting

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, J. Mather

8th Edition

0470929383, 978-0470929384

More Books

Students also viewed these Accounting questions

Question

It would have cost more to complain.

Answered: 1 week ago