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Problem 1 6 - 3 ( Algo ) Change in tax rate; single temporary difference; financial statement effects [ LO 1 6 - 2 ,
Problem Algo Change in tax rate; single temporary difference; financial statement effects LO
Dixon Development began operations in December 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 for lots sold this way was $ million, which will be collected over the next three years. Scheduled collections for are as follows:
$ million
million
million
$ million
Pretax accounting income for was $ million. The enacted tax rate is
Required:
Assuming no differences between accounting income and taxable income other than those described above, prepare the journal entry to record income taxes in
Suppose a new tax law, revising the tax rate from to beginning in is enacted in when pretax accounting income was $ million. No lot sales qualified for the special tax treatment. Prepare the appropriate journal entry to record income taxes in
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
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