Question
Bridgeport Inc. reported the following accounting income (loss) and related tax rates during the years 2015 to 2021: Accounting Tax Year Income (Loss) Rate 2015
Bridgeport Inc. reported the following accounting income (loss) and related tax rates during the years 2015 to 2021:
| Accounting | Tax | ||||||
|---|---|---|---|---|---|---|---|
| Year | Income (Loss) | Rate | |||||
| 2015 | $71,000 | 25% | |||||
| 2016 | 27,000 | 25% | |||||
| 2017 | 61,000 | 25% | |||||
| 2018 | 79,000 | 30% | |||||
| 2019 | (220,000 | ) | 35% | ||||
| 2020 | 72,000 | 30% | |||||
| 2021 | 89,000 | 25% | |||||
Accounting income (loss) and taxable income (loss) were the same for all years since Bridgeport began business. The tax rates from 2018 to 2021 were enacted in 2018. Assume Bridgeport 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 Bridgeport 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.)
| Year | Account Titles and Explanation | Debit | Credit |
| 2019 | Current Tax ExpenseCurrent Tax BenefitFuture Tax ExpenseIncome Tax Receivable-2016Income Tax Receivable-2017Future Tax BenefitAllowance to Reduce Future Tax Asset to Expected Realizable ValueIncome Tax PayableIncome Tax Receivable-2018Future Tax AssetNo Entry | ||
| Allowance to Reduce Future Tax Asset to Expected Realizable ValueFuture Tax AssetIncome Tax Receivable-2017Income Tax Receivable-2018Future Tax BenefitFuture Tax ExpenseIncome Tax PayableIncome Tax Receivable-2016Current Tax ExpenseNo EntryCurrent Tax Benefit | |||
| Future Tax BenefitNo EntryIncome Tax Receivable-2017Income Tax Receivable-2018Future Tax AssetCurrent Tax ExpenseCurrent Tax BenefitAllowance to Reduce Future Tax Asset to Expected Realizable ValueIncome Tax Receivable-2016Income Tax PayableFuture Tax Expense | |||
| Current Tax BenefitIncome Tax PayableFuture Tax AssetIncome Tax Receivable-2018Current Tax ExpenseIncome Tax Receivable-2017Future Tax ExpenseIncome Tax Receivable-2016Future Tax BenefitAllowance to Reduce Future Tax Asset to Expected Realizable ValueNo Entry | |||
| (To record benefit from loss carryback) | |||
| 2019 | Income Tax Receivable-2016Income Tax PayableAllowance to Reduce Future Tax Asset to Expected Realizable ValueFuture Tax ExpenseIncome Tax Receivable-2018No EntryFuture Tax AssetCurrent Tax ExpenseCurrent Tax BenefitIncome Tax Receivable-2017Future Tax Benefit | ||
| Future Tax AssetFuture Tax ExpenseAllowance to Reduce Future Tax Asset to Expected Realizable ValueCurrent Tax BenefitNo EntryIncome Tax Receivable-2016Income Tax PayableIncome Tax Receivable-2017Income Tax Receivable-2018Current Tax ExpenseFuture Tax Benefit | |||
| (To record future benefit from loss carryforward) | |||
| 2020 | Income Tax Receivable-2016Current Tax ExpenseAllowance to Reduce Future Tax Asset to Expected Realizable ValueFuture Tax BenefitIncome Tax Receivable-2017Future Tax ExpenseNo EntryIncome Tax Receivable-2018Income Tax PayableFuture Tax AssetCurrent Tax Benefit | ||
| Current Tax BenefitAllowance to Reduce Future Tax Asset to Expected Realizable ValueFuture Tax AssetFuture Tax ExpenseIncome Tax Receivable-2016No EntryFuture Tax BenefitCurrent Tax ExpenseIncome Tax PayableIncome Tax Receivable-2017Income Tax Receivable-2018 | |||
| (To record current tax expense) | |||
| 2020 | Future Tax BenefitNo EntryFuture Tax ExpenseIncome Tax Receivable-2018Income Tax Receivable-2017Current Tax BenefitIncome Tax PayableCurrent Tax ExpenseFuture Tax AssetIncome Tax Receivable-2016Allowance to Reduce Future Tax Asset to Expected Realizable Value | ||
| Future Tax BenefitNo EntryAllowance to Reduce Future Tax Asset to Expected Realizable ValueFuture Tax AssetIncome Tax Receivable-2017Current Tax BenefitIncome Tax PayableCurrent Tax ExpenseFuture Tax ExpenseIncome Tax Receivable-2018Income Tax Receivable-2016 | |||
| (To record future tax expense) | |||
| 2021 | No EntryIncome Tax Receivable-2017Current Tax ExpenseIncome Tax Receivable-2018Income Tax PayableCurrent Tax BenefitFuture Tax ExpenseFuture Tax BenefitFuture Tax AssetAllowance to Reduce Future Tax Asset to Expected Realizable ValueIncome Tax Receivable-2016 | ||
| Future Tax BenefitCurrent Tax ExpenseIncome Tax Receivable-2018Future Tax ExpenseIncome Tax PayableAllowance to Reduce Future Tax Asset to Expected Realizable ValueCurrent Tax BenefitFuture Tax AssetIncome Tax Receivable-2017No EntryIncome Tax Receivable-2016 | |||
| (To record income taxes) |
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
