Refer to the information in E18-9 for Raman Limited. Assume that the company reports under ASPE and that the taxes payable method of accounting is used for income tax.
Instructions
(a) Prepare the journal entry (ies) to record income tax at December 31, 2014.
(b) Prepare the income statement for 2014, beginning with the line "Income before income tax."
(c) Provide the statement of financial position presentation for any resulting income tax accounts at December 31, 2014.
(d) Prepare the disclosures that are necessary because the taxes payable method is being used.
(e) Now that Raman Limited has adopted the taxes payable method, how do you think the creditors to this accounting policy would react when they read Raman's financial statements? Explain.