Land's End Limited (LEL), a widely held manufacturing company, reported pre-tax net income from continuing operations...
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Land's End Limited (LEL), a widely held manufacturing company, reported pre-tax net income from continuing operations of $2,750,000 and pre- tax Other Comprehensive Income of $240,000 for the year ended December 31, 2013. Included in operating income were the following selected items: 1. Dividends received from taxable Canadian corporations: $165,000 2. Business meals : $126,000 3. Interest and penalties of $17,000 from an ongoing 2008 tax reassessment dispute with Revenue Canada 4. Warranty expense: $185,000 5. Rent expense: 80,000 6. Executive payroll of $3,450,000 7. Depreciation: $1,750,000 At the beginning of 2013, LEL reported, among other deferred tax balances, an amount of $206,640 arising from capital assets which had accounting and tax balances, at that date, of $10,750,000 and $10,176,000 respectively. Other selected account balances at the beginning of the year included: a) Estimated warranty liability: $2,650,000 b) Prepaid rent:$240,000 (three years remaining of prepaid rent paid for additional manufacturing space in 2012) c) Deferred Tax Asset of $1,152,000 arising from full recognition of previous years' loss carry-forward. d) Warranties paid: $225,000 There were no significant capital asset additions or disposals in 2013 and capital cost allowance claimed for 2013 was $2,000,000. The enacted tax rate for 2013 is 32%. 1. Prepare, with all supporting calculations, the required CURRENT tax entry(s) for the year ended December 31, 2013. (11 marks) Current tax reconciliation: (10 marks) Accounting income Permanent differences: Timing difference: Journal entry: (1 mark) 1. Required 2- Prepare, with all supporting calculations, the required DEFERRED tax entry(s) for the year ended December 31, 2013. (13 marks) Deferred tax analysis: (12 marks) Account GAAP Таx Diff. End Bal Beg Bl Adjust Journal entry: (2 marks) Land's End Limited (LEL), a widely held manufacturing company, reported pre-tax net income from continuing operations of $2,750,000 and pre- tax Other Comprehensive Income of $240,000 for the year ended December 31, 2013. Included in operating income were the following selected items: 1. Dividends received from taxable Canadian corporations: $165,000 2. Business meals : $126,000 3. Interest and penalties of $17,000 from an ongoing 2008 tax reassessment dispute with Revenue Canada 4. Warranty expense: $185,000 5. Rent expense: 80,000 6. Executive payroll of $3,450,000 7. Depreciation: $1,750,000 At the beginning of 2013, LEL reported, among other deferred tax balances, an amount of $206,640 arising from capital assets which had accounting and tax balances, at that date, of $10,750,000 and $10,176,000 respectively. Other selected account balances at the beginning of the year included: a) Estimated warranty liability: $2,650,000 b) Prepaid rent:$240,000 (three years remaining of prepaid rent paid for additional manufacturing space in 2012) c) Deferred Tax Asset of $1,152,000 arising from full recognition of previous years' loss carry-forward. d) Warranties paid: $225,000 There were no significant capital asset additions or disposals in 2013 and capital cost allowance claimed for 2013 was $2,000,000. The enacted tax rate for 2013 is 32%. 1. Prepare, with all supporting calculations, the required CURRENT tax entry(s) for the year ended December 31, 2013. (11 marks) Current tax reconciliation: (10 marks) Accounting income Permanent differences: Timing difference: Journal entry: (1 mark) 1. Required 2- Prepare, with all supporting calculations, the required DEFERRED tax entry(s) for the year ended December 31, 2013. (13 marks) Deferred tax analysis: (12 marks) Account GAAP Таx Diff. End Bal Beg Bl Adjust Journal entry: (2 marks)
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Current tax reconciliation Net Income Before Tax Permanent di... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0470423684
13th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
Posted Date:
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