Complete the following statements by filling in the blanks. (a) If total tax exp
ID: 2535295 • Letter: C
Question
Complete the following statements by filling in the blanks.
expensebenefit
of $ . (b) An increase in the Deferred Tax Liability account on the balance sheet is recorded by acreditdebit
to the Income Tax Expense account. (c) In a period in which a taxable temporary difference reverses, the reversal will cause taxable income to belessthangreater than
pretax financial income. (d) An income statement that reports current tax expense of $89,000 and deferred tax benefit of $24,000 will report total income tax expense of $ . (e) If a corporation’s tax return shows taxable income of $98,000 for Year 2 and a tax rate of 40%, how much will appear on the December 31, Year 2, balance sheet for “Income taxes payable” if the company has made estimated tax payments of $35,600 for Year 2? $ . (f) If a $80,400 balance in Deferred Tax Asset was computed by use of a 40% rate, the underlying cumulative temporary difference amounts to $ . (g) A valuation account is needed whenever it is judged to bemore likely than notunlikely
that a portion of a deferred tax assetwill not bewill be
realized. (h) Deferred taxesareare not
recorded to account for permanent differences. (i) If the tax return shows total taxes due for the period of $75,000 but the income statement shows total income tax expense of $55,000, the difference of $20,000 is referred to as deferred taxbenefitexpense
. (j) If a taxable temporary difference originates in 2017, it will cause taxable income for 2017 to beless thangreater than
pretax financial income for 2017.Explanation / Answer
Solution a:
If total tax expense is $45,000 and deferred tax expense is $63,000, then the current portion of the expense computation is referred to as current tax benefit of $18,000 ($63,000 - $45,000)
Solution b:
An increase in the Deferred Tax Liability account on the balance sheet is recorded by a debit to the Income Tax Expense account.
Solution c:
In a period in which taxable temporary differences reverses, the reversal will cause taxable income to be greater than pre tax financial incoime.
Solution d:
An income statement that reports current tax expense of $89,000 and deferred tax benefit of $24,000 will report total income tax expense of $ 65000 ($89,000 - $24,000)
Solution e:
If a corporation’s tax return shows taxable income of $98,000 for Year 2 and a tax rate of 40%, how much will appear on the December 31, Year 2, balance sheet for “Income taxes payable” if the company has made estimated tax payments of $35,600 for Year 2?
Total tax payable = $98,000 * 40% = $39,200
Tax payment made = $35,600
Income tax payable to be shown in balance sheet = $39,200 - $35,600 = $3,600
Solution f:
If a $80,400 balance in Deferred Tax Asset was computed by use of a 40% rate, the underlying cumulative temporary difference amounts to $ 201,000 ( $80,400 /40%)
Solution g:
A valuation account is needed whenever it is judged to be most likely that a portion of a deferred tax asset will not be realized.
Solution h:
Deferred taxes are not recorded to account for permanent differences.
Solution i:
If the tax return shows total taxes due for the period of $75,000 but the income statement shows total income tax expense of $55,000, the difference of $20,000 is referred to as deferred tax benefit.
Solution j:
If a taxable temporary difference originates in 2017, it will cause taxable income for 2017 to be lesser than pretax financial income for 2017.
If the tax return shows total taxes due for the period of $75,000 but the income statement shows total income tax expense of $55,000, the difference of $20,000 is referred to as deferred tax benefit.
Solution j:
If a taxable temporary difference originates in 2017, it will cause taxable income for 2017 to be lesser than pretax financial income for 2017.