Exam 16: Accounting for Income Taxes

Under current tax law, generally a net operating loss may be carried back:

The Bell Company had the following operating results: What is the income tax refund receivable?

For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Tringali's tax rate is 40%. Assume that no estimated taxes have been paid. -What should Tringali report as its deferred income tax liability as of the end of its first year of operations?

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Interperiod tax allocation

Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences reported first on: Required: For each situation, determine the taxable income assuming pretax accounting income is $100,000. Show well-labeled computations.

What events create permanent differences between accounting income and taxable income? What effect do these events have on the determination of income taxes payable and deferred income taxes?

Information for Kent Corp. for the year 2018: Reconciliation of pretax accounting income and taxable income: Cumulative future taxable amounts all from depreciation temporary differences: The enacted tax rate was 30% for 2017 and thereafter. - What would Kent's income tax expense be in the year 2018?

Recognizing tax benefits in a loss year due to a net operating loss carryforward requires:

For the current year ($ in millions), Centipede Corp. had $80 in pretax accounting income. This included warranty expense of $6 and $20 in depreciation expense. Two million of warranty costs were incurred, and MACRS depreciation amounted to $35. In the absence of other temporary or permanent differences, what was Centipede's taxable income?

For classification purposes, a valuation allowance:

Which of the following creates a deferred tax asset?

Which of the following usually results in an increase in a deferred tax asset?

In reconciling net income to taxable income, interest earned on municipal bonds is:

Information for Kent Corp. for the year 2018: Reconciliation of pretax accounting income and taxable income: Cumulative future taxable amounts all from depreciation temporary differences: The enacted tax rate was 30% for 2017 and thereafter. - What should be the balance in Kent's deferred tax liability account as of December 31, 2018?

Two independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences: The enacted tax rate is 40% for both situations. Required: For each situation determine the: (a.) Income tax payable currently. (b.) Deferred tax asset - balance at year-end. (c.) Deferred tax asset change dr or (cr) for the year. (d.) Deferred tax liability - balance at year-end. (e.) Deferred tax liability change dr or (cr) for the year. (f.) Income tax expense for the year.

In its first four years of operations Peridot Jewelers reported the following operating income (loss) amounts: There were no other deferred income taxes in any year. In 2017, Peridot elected to carry back its operating loss. The enacted income tax rate was 40%. In its 2018 income statement, what amount should Peridot report as current income tax payable?

In 2018, Magic Table Inc. decides to add a 36-month warranty on its new product sales. Warranty costs are tax deductible when claims are settled. In its financial statements for 2018, Magic Table Inc incurs:

Plutonic Inc. had $400 million in taxable income for the current year. Plutonic also had an increase in deferred tax liabilities of $50 million and recognized tax expense of $80 million. The company is subject to a tax rate of 40%. The change in deferred tax assets (ignoring any valuation allowance) was a/an:

Several years ago, Western Electric Corp. purchased equipment for $20,000,000. Western uses straight-line depreciation for financial reporting and MACRS for tax purposes. At December 31, 2017, the carrying value of the equipment was $18,000,000 and its tax basis was $15,000,000. At December 31, 2018, the carrying value of the equipment was $16,000,000 and the tax basis was $11,000,000. There were no other temporary differences and no permanent differences. Pretax accounting income for the current year was $25,000,000. A tax rate of 35% applies to all years. Required: Prepare one journal entry to record Western's income tax expense for the current year. Show well-labeled computations for the income tax payable and the change in the deferred tax account.

Four independent situations are described below. Each involves future deductible amounts and/or future taxable amounts produced by temporary differences reported first on: For each situation, determine the taxable income assuming pretax accounting income is $100,000. Show well-labeled computations.