The following information is available for the first four years of operations for Acme Company: i....
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The following information is available for the first four years of operations for Acme Company: i. Taxable Income Tax Rate $450,000 21% 19% 19% 19% Year 2019 2020 2021 2022 325,000 455,000 462,000 ii. On January 1, 2019, heavy equipment costing $1,000,000 was purchased. The equipment had a life of 4 years and no salvage value. The straight-line method of depreciation is used for book¹ purposes and the tax depreciation taken each year is listed below: 2019 $330,000 Tax Depreciation 2021 2022 2020 $450,000 $150,000 $70,000 Total $1,000,000 iii. On January 1, 2019, $450,000 was collected in advance for rental of a building for a three-year period. The entire $450,000 was reported as taxable income in 2019, but $300,000 of the $450,000 was reported as unearned revenue at December 31, 2019 for book purposes. iv. In 2019, the company received $15,000 interest on municipal bonds. v. In 2020, the company recognized $30,000 in fine for pollution as an expense on the income statement. Instructions (a) Calculate pretax financial income for 2019 and 2020. (4 points) (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2019. (3 points) (c) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2020. (3 points) (d) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2021. (3 points) The following information is available for the first four years of operations for Acme Company: i. Taxable Income Tax Rate $450,000 21% 19% 19% 19% Year 2019 2020 2021 2022 325,000 455,000 462,000 ii. On January 1, 2019, heavy equipment costing $1,000,000 was purchased. The equipment had a life of 4 years and no salvage value. The straight-line method of depreciation is used for book¹ purposes and the tax depreciation taken each year is listed below: 2019 $330,000 Tax Depreciation 2021 2022 2020 $450,000 $150,000 $70,000 Total $1,000,000 iii. On January 1, 2019, $450,000 was collected in advance for rental of a building for a three-year period. The entire $450,000 was reported as taxable income in 2019, but $300,000 of the $450,000 was reported as unearned revenue at December 31, 2019 for book purposes. iv. In 2019, the company received $15,000 interest on municipal bonds. v. In 2020, the company recognized $30,000 in fine for pollution as an expense on the income statement. Instructions (a) Calculate pretax financial income for 2019 and 2020. (4 points) (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2019. (3 points) (c) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2020. (3 points) (d) Prepare the journal entry to record income tax expense, deferred income taxes, and income tax payable for 2021. (3 points)
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Required 1 Calculation of financial income Particulars Taxable Income Add Depreciation ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Posted Date:
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