Question
Decker Corporation experienced a loss in 2020. Additional information for Decker Corporation follows. 2020 Taxable income (loss) $(130,000) Income tax rate 25% There were no
Decker Corporation experienced a loss in 2020. Additional information for Decker Corporation follows.
2020 | |
---|---|
Taxable income (loss) | $(130,000) |
Income tax rate | 25% |
There were no temporary differences from 2018 to 2020 other than any related to a net operating loss carryforward.
a. Record income taxes for 2020 and 2021 assuming the following.
- For 2021, the company computed taxable income of $90,000 and recognized a deferred tax liability balance of $4,500 related to acquisition of depreciable assets in its year-end financial statements. These amounts were consistent with management's expectations.
- The income tax rate enacted in 2020 and effective for 2021 and thereafter is 30%.
- Management estimates the valuation allowance on the deferred tax asset related to its 2020 NOL to be zero.
Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order.
Date | Account Name | Dr. | Cr. |
---|---|---|---|
Dec. 31, 2020 | AnswerDeferred Tax AssetValuation Allowance for Deferred Tax AssetIncome Tax PayableLiability for Unrecognized Tax BenefitsDeferred Tax LiabilityIncome Tax ExpenseN/A | Answer | Answer |
AnswerDeferred Tax AssetValuation Allowance for Deferred Tax AssetIncome Tax PayableLiability for Unrecognized Tax BenefitsDeferred Tax LiabilityIncome Tax ExpenseN/A | Answer | Answer |
Date | Account Name | Dr. | Cr. |
---|---|---|---|
Dec. 31, 2021 | AnswerDeferred Tax AssetValuation Allowance for Deferred Tax AssetIncome Tax PayableLiability for Unrecognized Tax BenefitsDeferred Tax LiabilityIncome Tax ExpenseN/A | Answer | Answer |
AnswerDeferred Tax AssetValuation Allowance for Deferred Tax AssetIncome Tax PayableLiability for Unrecognized Tax BenefitsDeferred Tax LiabilityIncome Tax ExpenseN/A | Answer | Answer | |
AnswerDeferred Tax AssetValuation Allowance for Deferred Tax AssetIncome Tax PayableLiability for Unrecognized Tax BenefitsDeferred Tax LiabilityIncome Tax ExpenseN/A | Answer | Answer | |
AnswerDeferred Tax AssetValuation Allowance for Deferred Tax AssetIncome Tax PayableLiability for Unrecognized Tax BenefitsDeferred Tax LiabilityIncome Tax ExpenseN/A | Answer | Answer |
b. List the amounts that should be reported on the income statements and balance sheets for 2020 and 2021.
Note: Use a negative sign to indicate a loss.
Income statement | 2020 |
---|---|
Loss before tax | Answer |
Income tax benefit | Answer |
Net income (loss) | Answer |
Note: Do not use negative signs with your answers.
Income statement | 2021 |
---|---|
Income before tax | Answer |
Income tax expense | Answer |
Net income (loss) | Answer |
Balance Sheet, Dec. 31 | 2020 | 2021 |
---|---|---|
Noncurrent assets | ||
AnswerDeferred Tax AssetValuation Allowance for Deferred Tax Asset Income Tax Payable Liability for Unrecognized Tax BenefitsDeferred Tax LiabilityIncome Tax ExpenseN/A | Answer | Answer |
Current liabilities | ||
AnswerDeferred Tax AssetValuation Allowance for Deferred Tax AssetIncome Tax PayableLiability for Unrecognized Tax BenefitsDeferred Tax LiabilityIncome Tax ExpenseN/A | Answer | Answer |
Noncurrent liabilities | ||
AnswerDeferred Tax AssetValuation Allowance for Deferred Tax AssetIncome Tax PayableLiability for Unrecognized Tax BenefitsDeferred Tax LiabilityIncome Tax ExpenseN/A | Answer | Answer |
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