Question

For the fiscal year ended December 31, 2018, Ross land Ltd. (Rossland) has income before taxes of $650,000. Rossland's tax return shows taxable income of $550,000 for the year. The accounting basis of Rossland's assets exceeded the tax basis by $150,000 on December 31, 2018 and the balance in the future income tax account on December 31, 2017 was a credit of $20,000. All temporary differences pertain to non-current assets. Rossland has a tax rate of 15 percent.

Required:
a. What should Rossland report for future income taxes on its December 31, 2018 balance sheet?
b. What is Rossland's net income for fiscal 2018?
c. What would Rossland's net income be if it used the taxes payable method?
d. Explain the difference between (b) and (c).
e. Prepare the journal entry required to record Rossland's income tax expense for fiscal 2018, using the deferred (future) income tax method.



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  • CreatedFebruary 26, 2015
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