Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Dixon Development began operations in December 2021. When lots for industrial development are sold, Dixon recognizes income for financial reporting purposes in the year of

image text in transcribed

Dixon Development began operations in December 2021. When lots for industrial development are sold, Dixon recognizes income for financial reporting purposes in the year of the sale. For some lots, Dixon recognizes income for tax purposes when collected. Income recognized for financial reporting purposes in 2021 for lots sold this way was $28 million, which will be collected over the next three years. Scheduled collections for 20222024 are as follows: Pretax accounting income for 2021 was $38 million. The enacted tax rate is 45%. Required: 1. Assuming no differences between accounting income and taxable income other than those described above, prepare the journal entry to record income taxes in 2021. 2. Suppose a new tax law, revising the tax rate from 45% to 40%, beginning in 2023 , is enacted in 2022 , when pretax accounting income was $32 million. No 2022 lot sales qualified for the special tax treatment. Prepare the appropriate journal entry to record income taxes in 2022. 3. If the new tax rate had not been enacted, what would have been the appropriate balance in the deferred tax liability account at the end of 2022

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

Guide To The Study Of Auditing 1914

Authors: Samuel F. Racine

1st Edition

0266614493, 978-0266614494

More Books

Students also viewed these Accounting questions

Question

Presentations Approaches to Conveying Information

Answered: 1 week ago