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the year it sells the plots. For some of the plots sold this year. Tru took the position that it could recognize the income for
the year it sells the plots. For some of the plots sold this year. Tru took the position that it could recognize the income for tax purposes when the installments are collected. Income that Tru recognized for financlal reporting purposes in for plots in this category was $ million. The company expected to collect of each sale in and in This amount over the next two years is as follows: Tru's pretax accounting income for was $ million. In Its income statement, Tru reported interest income of $ million, unrelated to the land sales, for which the company's position is that the interest is not taxable. Accordingly, the interest was not reported on the tax return. There are no differences between accounting income and taxable Income other than those described above. The enacted tax rate is percent: Management believes the tax position taken on the land sales has a greater than chance of belng upheld based on its technical merits, but the position taken on the Interest has a less than chance of belng upheld. It is further belleved that the following Iikelihood percentages apply to the tax treatment of the land sales $ in millions: Arount Qualifying for Instalinent Sales Treatment Percentge Llkethod of Thx Treatient being Sustalined Required: What portion of the tax benefit of taxfree interest will Tru recognize on Its tax return? What portion of the tax benefit of taxfree Interest will Tru recognize on its financial statements? a What portion of the tax on the $ milion Income from the plots sold on an installment basis will Tru defer on Its tax retum? b What portion of the tax on the $ milion income from the plots sold on an installment basis will Tru show as a deferred tax asset or llability in Its financlal statements? Prepare the Journal entry to record income taxes In assuming full recognition of the tax benefits in the financial statements of both differences between pretax accounting income and taxable income. Prepare the Journal entry to record income taxes in assuming the recognition of the tax benefits in the financial statements you indicated in requlrements
the year it sells the plots. For some of the plots sold this year. Tru took the position that it could recognize the income for tax purposes when the installments are collected. Income that Tru recognized for financlal reporting purposes in for plots in this category was $ million. The company expected to collect of each sale in and in This amount over the next two years is as follows:
Tru's pretax accounting income for was $ million. In Its income statement, Tru reported interest income of $ million, unrelated to the land sales, for which the company's position is that the interest is not taxable. Accordingly, the interest was not reported on the tax return. There are no differences between accounting income and taxable Income other than those described above. The enacted tax rate is percent:
Management believes the tax position taken on the land sales has a greater than chance of belng upheld based on its technical merits, but the position taken on the Interest has a less than chance of belng upheld. It is further belleved that the following Iikelihood percentages apply to the tax treatment of the land sales $ in millions:
Arount Qualifying for Instalinent
Sales Treatment
Percentge Llkethod of Thx
Treatient being Sustalined
Required:
What portion of the tax benefit of taxfree interest will Tru recognize on Its tax return?
What portion of the tax benefit of taxfree Interest will Tru recognize on its financial statements?
a What portion of the tax on the $ milion Income from the plots sold on an installment basis will Tru defer on Its tax retum?
b What portion of the tax on the $ milion income from the plots sold on an installment basis will Tru show as a deferred tax asset or llability in Its financlal statements?
Prepare the Journal entry to record income taxes In assuming full recognition of the tax benefits in the financial statements of both differences between pretax accounting income and taxable income.
Prepare the Journal entry to record income taxes in assuming the recognition of the tax benefits in the financial statements you indicated in requlrements
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