Question

At December 31, 2010, Chloe Corporation had a temporary difference (related to pensions) and reported a related future tax asset of $40,000 on its balance sheet. At December 31, 2011, Chloe has five temporary differences. An analysis reveals the following:
The enacted tax rate has been 40% for many years. In November 2011, the rate was changed to 38% for all periods after January 1, 2013. Assume that the company has income taxes due of $180,000 on the 2012 tax return and Chloe follows the PE GAAP future income taxes method.
Instructions
(a) Indicate how future income taxes should be presented on Chloe Corporation’s December 31, 2011 balance sheet.
(b) How would your response to (a) change if Chloe reported under IFRS?
(c) Calculate taxable income for 2011.
(d) Calculate accounting income for 2011.
(e) Draft the income tax section of the 2011 income statement, beginning with the line “Income before income taxes.” Provide as much information as possible about the components of income tax expense.


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  • CreatedAugust 23, 2015
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