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E19-5B (Two Temporary Differences, One Rate, Beginning Deferred Taxes)The following facts relate to Xylo Corporation. Exercises.qxd 3/14/13 12:01 PM Page 1 1. Deferred tax liability, January 1, 2012, $0. 2. Deferr

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E19-5B (Two Temporary Differences, One Rate, Beginning Deferred Taxes)The following facts relate to Xylo Corporation.;1. Deferred tax liability, January 1, 2012, $0.;2. Deferred tax asset, January 1, 2012, $24,000.;3. Taxable income for 2014, $265,000.;4. Pretax financial income for 2014, $345,000.;5. Cumulative temporary difference at December 31, 2014, giving rise to future taxable amounts, $140,000.;6. Cumulative temporary difference at December 31, 2014, giving rise to future deductible amounts, $120,000.;7. Tax rate for all years, 40%.;8. The company is expected to operate profitably in the future.;Instructions;(a) Compute income taxes payable for 2014.;(b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2014.;(c) Prepare the income tax expense section of the income statement for 2014, beginning with the line;?Income before income taxes.?

 

Paper#75333 | Written in 18-Jul-2015

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