Maria Rodriquez and Lynette Kingston are discussing accounting for income taxes. They are currently studying a schedule

Question:

Maria Rodriquez and Lynette Kingston are discussing accounting for income taxes. They are currently studying a schedule of taxable and deductible amounts that will arise in the future as a result of existing temporary differences. The schedule is as follows.

Instructions

a. Explain the concept of future taxable amounts and future deductible amounts as illustrated in the schedule.

b. How does the carryforward provision affect the reporting of deferred tax assets and deferred tax liabilities?

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Related Book For answer-question

Intermediate Accounting

ISBN: 978-1119503668

17th edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel

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Question Posted: Dec 05, 2019 06:31 AM

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Maria Rodriquez and Lynette Kingston are discussing accounting for income taxes. They are currently studying a schedule

Question:

Future Years 2022 2020 2021 2023 2024 Taxable income $850,000 Taxable amounts Deductible amounts Enacted tax rate $375,000 $375,000 $375,000 (2,400,000) 35% 30% 40% 45% 50%

Step by Step Answer:

a Future taxable amounts increase taxable income relative to pretax financial income in the future due to temporary differences existing at the balanc...View the full answer

Intermediate Accounting

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