TriggerPoint Corp., a private corporation which follows ASPE, is in the process of preparing its financial...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
TriggerPoint Corp., a private corporation which follows ASPE, is in the process of preparing its financial statements for its second year of operations ending December 31, 2020. Pertinent information follows: • Accounting income before tax is $1,500,000. • Depreciation on property, plant and equipment (PPE) in the books is $150,000 and CCA claimed will be $250,000. At the beginning of the year, the book value of the PPE was $1,200,000. • The company sells a product with a 2-year warranty. The estimated warranty cost is $100 per unit. At the beginning of 2020, the balance in the warranty liability account was $400,000. During 2020, the company sold 5,000 units of the product and paid out $200,000 in warranty costs. It expects that the adjusted warranty liability balance at the end of 2020 to be spent evenly over 2021 and 2022. At the end of 2019, the company also expected the adjusted warranty liability amount to be paid evenly over 2020 and 2021. The beginning balance of the future income tax liability account related to the PPE was $60,000. The beginning balance of the future income tax asset account related to the warranty was $160,000. • The accounting income before tax included $50,000 in entertainment expenses, of which only 50% can be deducted for income tax purposes. • At the beginning of 2020, the enacted income tax rate went down from 40% to 35%. On December 31, 2020, the company received three years advance rent income (for 2021 through 2023) of $90,000, which was recorded as unearned revenue for book purposes, but which must be reported as 2020 revenue for income tax purposes. Required a. Reconcile accounting income before tax to taxable income for 2020. b. Prepare the required income tax related journal entries for 2020. c. Prepare the bottom section of the 2020 income statement, beginning with income before income taxes. d. What are the amounts and the SFP classifications of the future income tax asset and liability accounts at December 31, 2020? TriggerPoint Corp., a private corporation which follows ASPE, is in the process of preparing its financial statements for its second year of operations ending December 31, 2020. Pertinent information follows: • Accounting income before tax is $1,500,000. • Depreciation on property, plant and equipment (PPE) in the books is $150,000 and CCA claimed will be $250,000. At the beginning of the year, the book value of the PPE was $1,200,000. • The company sells a product with a 2-year warranty. The estimated warranty cost is $100 per unit. At the beginning of 2020, the balance in the warranty liability account was $400,000. During 2020, the company sold 5,000 units of the product and paid out $200,000 in warranty costs. It expects that the adjusted warranty liability balance at the end of 2020 to be spent evenly over 2021 and 2022. At the end of 2019, the company also expected the adjusted warranty liability amount to be paid evenly over 2020 and 2021. The beginning balance of the future income tax liability account related to the PPE was $60,000. The beginning balance of the future income tax asset account related to the warranty was $160,000. • The accounting income before tax included $50,000 in entertainment expenses, of which only 50% can be deducted for income tax purposes. • At the beginning of 2020, the enacted income tax rate went down from 40% to 35%. On December 31, 2020, the company received three years advance rent income (for 2021 through 2023) of $90,000, which was recorded as unearned revenue for book purposes, but which must be reported as 2020 revenue for income tax purposes. Required a. Reconcile accounting income before tax to taxable income for 2020. b. Prepare the required income tax related journal entries for 2020. c. Prepare the bottom section of the 2020 income statement, beginning with income before income taxes. d. What are the amounts and the SFP classifications of the future income tax asset and liability accounts at December 31, 2020?
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
The norm of a linear transformation TA: Rn Rn can be defined by where the maximum is taken over all nonzero x in Rn. (The subscript indicates that the norm of the linear transformation on the left is...
-
Suppose that f: Rn R and g: Rn Rn are differentiable on Rn and that there exist r > 0 and a Rn such that Dg(x) is the identity matrix, I, for all x Br(a). Prove that there is a function h: Br(a) {a}...
-
Let 5: Rn Rn and T: Rn Rn be linear transformations with matrices A and B respectively. [Theorem 3.] (a) Show that B2 = B if and only if T2 = 7 (where T2 means T o T). (b) Show that B2 = 1 if and...
-
What are the possible sources of error in this project?
-
Describe how the weights are used in the weighted scoring model for seller proposal selection.
-
Use induction to prove the summation formulae (1.60). (1.61) and (1.62). n-n multiplications and J- 1 additions. j-1 j=1 multiplications, along with j-1 (n-j) = additions i-1
-
Which conditions for the binomial distribution, if any, fail to hold in the following situations? (a) The number of persons having a cold at a family reunion attended by 30 persons. (b) Among 8...
-
The following are brief descriptions of several companies in different lines of business. A. Company A is a construction company. It has recently signed a contract to build a highway over a...
-
Cullumber Manufacturing incurs $ 8 0 , 0 0 0 of direct labour costs. Supporting records show that the assembly department used $ 4 6 , 7 0 0 of the direct labour and the finishing department used the...
-
a. Each of the following figures shows a person (not to scale) located on Earth at either 40?N or 40?S latitude Rank the figures based on how much time the person spends in day period. from most to...
-
f) If a = (s) m/s 2 , where s is in meters, determine v when s = 5 m if v = 0 at s = 4 m. g) If a = 4 m/s 2 , determine s when t = 3 s if v = 2 m/s, and s = 2 m when t = 0.
-
you are a cpa in a private practice and you have a client that has received a 30-day letter related to an irs audit that was recentently concluded. The proposed assessment including interest and...
-
Ned, Opie and Paul are equal partners. The partnership is cash basis taxpayer and uses the interim closing of the book's method. On October 1, Quinn joins the partnership, and the four become equal...
-
Ahab is a lighthouse keeper, which requires him to live on a small island off the coast of Maine. The island has a large home, which is powered by electricity and fully stocked with food. Ahab lives...
-
The current price of silver is $ 3 0 per ounce. The storage costs are $ 0 . 1 2 per ounce per quarterly payable in advance. Compute the forward price of 1 ounce of silver for delivery in 9 months....
-
Mel is a trucker, who works twelve hour days, four days a week. Because he is on the road over supper time, his employer provides him with an $60 a week that they label "supper money." Last year that...
-
The Canadian dollar is costing the US importers $0.759/Ca$. The Exchange rate is $0.759/Ca$. If the price of the Canadian dollar appreciates to $0.860/Ca$ how will this affect Canadian exports to the...
-
Select the correct answer for each of the following questions. 1. On December 31, 20X3, Saxe Corporation was merged into Poe Corporation. In the business combination, Poe issued 200,000 shares of its...
-
Amazing Ridge Luxury Resorts has been evaluating how it might expand its sustainability efforts in its hotels. In any given month, an average of 73,000 room days are available in total ( this total...
-
Use the information from the Crystal Cruiseline Data Set. Suppose Crystal Cruiseline embarks on a cost reduction drive and slashes fixed expenses from $ 210,000 per month to $ 180,000 per month. 1....
-
Connery Industries manufactures wooden backyard playground equipment. Connery estimated $ 1,890,000 of manufacturing overhead and $ 2,160,000 of direct labor cost for the year. After the year was...
-
1. Describe the bases of power held by Dr. Jamie Thompson. Describe the bases of power held by Dr. Elizabeth Clarke. 2. What activities and people have contributed to Jaime Thompsons power? What...
-
What is the current in the wire in Figure Q22.1? 1.0 VR + 1.0-1.0V + FIGURE Q22.1
-
Electroconvulsive therapy is a last-line treatment for certain mental disorders. In this treatment, an electric current is passed directly through the brain, inducing seizures. The total charge that...
Study smarter with the SolutionInn App