Barbara's Biscuit Barn has the following information available regarding taxable income and the Net Book Value of
Question:
Barbara's Biscuit Barn has the following information available regarding taxable income and the Net Book Value of various balance sheet accounts:
2019 2020
Taxable Income. $312,000 $574,000
As of: 12/31/2019 12/31/2020
NBV of Prop, Plant, and Equipment. $651,000 $743,000
Tax basis of Prop, Plant, and Equipment $543,000 $606,000
NBV of Deferred/Unearned Rev $2,000 $13,000
NBV of Warranty Liability $4,000 $5,100
Other Information:
Amounts received as deferred/unearned revenue are included in taxable income when received. Warranties expenditures are deductible when paid. The company's effective tax rate is 25%.
Required:
a. Compute payable for 2020
b. Compute the value of deferred tax assets and liabilities at 12/31/2020
c. Compute the change in deferred tax assets and liabilities from 12/31/2019 to 12/31/2020
d. Compute tax expense for 2020
e. Prepare the entry to record income tax expense for 2020
Accounting Principles Part 3
ISBN: 978-1118306802
6th Canadian edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow