The differences between the book basis and tax basis of the assets and liabilities of Host Five
Question:
The differences between the book basis and tax basis of the assets and liabilities of Host Five Inc. at the end of 2014 are presented below.
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It is estimated that the warranty accrual will be settled in 2015 ($75,000) and 2016 ($45,000). The difference in accounts receivable will result in taxable amounts of $60,000 in 2015, 2016, and 2017. The company has taxable income of $200,000 in 2014 and is expected to have taxable income in each of the following 3 years. Its enacted tax rate is 35% for all years. This is the company’s first year of operations.
Instructions
(a) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2014.
(b) Indicate how deferred income taxes will be reported on the balance sheet at the end of2014.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
a Income Tax Expense91000 Deferred Tax Asset 42000 Income Tax Payable 70000 Deferred Tax Liability 6...View the full answer
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
