XYZ is a Canadian - controlled public company. The company has a December 31 fiscal year...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
XYZ is a Canadian - controlled public company. The company has a December 31 fiscal year end. The company has a policy of using loss carrybacks in the earliest possible year. Data concerning the earnings of the company for 20x6 and 20x7 are as follows: 20x6 (95,000) 20x7 Earnings (loss) before income tax Amounts included in income 35,000 Investment income 1,250 1.750 Depreciation expense - equipment Depreciation expense - development costs Amounts deducted for income tax Capital Cost Allowance Development Expenditures 31,000 34.000 19,000 21.000 27,000 26,000 14,000 Income Tax Rate 37% 38% Other Information: Taxable income and the income tax rates for 20x2 through 20x5 are as follows: Taxable Income (loss) 7,500 Year Tax Rate 20x2 40% 20x3 20x4 20x5 12,500 8,000 (12,500) 40% 40% 41% 580,000 and UCC of At December 31 20x5, equipment had net book value of At December 31, 20x5, the SFP showed an unamortized balance of development costs of The investment income consists of dividends from taxable Canadian corporations 320.000 195,000 under 'other assets' 1. For each of 20x6, and 20x7, prepare the journal entry or entries to record income tax expense. Assume that management judges that it is probable that the full benefit of any tax loss carryforward will be realized within the carryforward. 2. Show how the deferred tax amounts would appear on the 20x6 year-end SFP 3. Supplose that the 20x7 management decided in 20x8 that it was probable that the company would only use tax loss carryforward. 9,000 of the remaining gross a. show the entry that would be made to reduce the carryforward benefit b. what impact would this entry have on the 20x8 financial statements? XYZ is a Canadian - controlled public company. The company has a December 31 fiscal year end. The company has a policy of using loss carrybacks in the earliest possible year. Data concerning the earnings of the company for 20x6 and 20x7 are as follows: 20x6 (95,000) 20x7 Earnings (loss) before income tax Amounts included in income 35,000 Investment income 1,250 1.750 Depreciation expense - equipment Depreciation expense - development costs Amounts deducted for income tax Capital Cost Allowance Development Expenditures 31,000 34.000 19,000 21.000 27,000 26,000 14,000 Income Tax Rate 37% 38% Other Information: Taxable income and the income tax rates for 20x2 through 20x5 are as follows: Taxable Income (loss) 7,500 Year Tax Rate 20x2 40% 20x3 20x4 20x5 12,500 8,000 (12,500) 40% 40% 41% 580,000 and UCC of At December 31 20x5, equipment had net book value of At December 31, 20x5, the SFP showed an unamortized balance of development costs of The investment income consists of dividends from taxable Canadian corporations 320.000 195,000 under 'other assets' 1. For each of 20x6, and 20x7, prepare the journal entry or entries to record income tax expense. Assume that management judges that it is probable that the full benefit of any tax loss carryforward will be realized within the carryforward. 2. Show how the deferred tax amounts would appear on the 20x6 year-end SFP 3. Supplose that the 20x7 management decided in 20x8 that it was probable that the company would only use tax loss carryforward. 9,000 of the remaining gross a. show the entry that would be made to reduce the carryforward benefit b. what impact would this entry have on the 20x8 financial statements?
Expert Answer:
Answer rating: 100% (QA)
1 2 The temporary differences 20X6 are all noncurrent As a result when the SFP is prepared they will ... View the full answer
Related Book For
Accounting Principles Volume 1
ISBN: 978-1119502425
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
Posted Date:
Students also viewed these accounting questions
-
Karsch Enterprises has a December 31 fiscal year end and uses straight-line amortization to the nearest month for its finite-life intangible assets . The company has provided you with the following...
-
Karsch Enterprises has a December 31 fiscal year end and uses straight-line amortization to the nearest month for its finite-life intangible assets . The company has provided you with the following...
-
Chandler Retail has a December 31 fiscal year end and the company sells more merchandise in November and December than in any other month. The company has a "no questions asked" policy in terms of...
-
The data file arch.gdt contain monthly stock price indices return of U.S. Nasdaq (NR). The data are recorded monthly beginning in 1988:01 and ending in 2015:12. Question 1. i) (Bonus) Consider the...
-
On December 7, 2008, Alpharm issued shares of convertible preferred stock and warrants to purchase additional shares of preferred stock for an aggregate issue price of $46,180,000 in a private...
-
Evaluate the steady state exergy fluxes due to a heat transfer of 250 W through a wall with 600 K on one side and 400 K on the other side. What is the exergy destruction in the wall.
-
One of the key drivers of downsizing and outsourcing is globalization. One result of globalization is the offshoring of jobs to developing countries. Outsourcing allows for products to be...
-
A solid block X of mass MX may be placed at different locations along a curved ramp. At the bottom of the ramp is a solid block Y of mass MY that is at rest on a horizontal surface. Figure 1 shows...
-
What characteristics of the board of directors usually lead to effective corporate governance? List three provisions in the corporate charter that affect takeovers.
-
Ozuna Company uses a job-order costing system with a plantwide predetermined overhead rate based on direct labor-hours. For job costing purposes, it uses an average direct labor wage rate of $20 per...
-
1. Suppose that a window manufacturer is monitoring the process used to make its windows. Every 15 minutes, the manufacturer measures the width of 5 windows. Over the course of two and a half hours,...
-
Qa Given the code snippet below, what would be the output after the code executes? public class Person ( } public void display() { } public class Student extends Person { public void display() { } O...
-
Price elasticity of demand and supply are key concepts in both microeconomics and macroeconomics, helping to understand how changes in prices affect the quantity demanded or supplied. In...
-
1. Create a row array that has the following elements (assign it to a variable named x). 13 * 53, 25 sin 25 14-62' cos 80 129, cos (/10)
-
Use the 4-step process to find the comparative advantage and the gains from specialization and trade. The terms of the trade are each person trades half. How many additional pineapples does Tina...
-
Conduct a meeting with team members A. In this activity, you will be playing the role of the newly appointed marketing manager. Assume that you have given a task by the Career Training management to...
-
Write a method substitute that substitutes len chars for the blanks used in the constructor Recall that this constructor initializes a newly created String to lenarg blanks.
-
A city maintains a solid waste landfill that was 12 percent filled at the end of Year 1 and 26 percent filled at the end of Year 2. During those periods, the government estimated that total closure...
-
Cecilia Hernandez earned $60,100 in 2018 and was paid monthly. She worked for HillSide Tours for all of 2018. Using the formulas, what were her CPP and EI deductions in (a) January 2018 (b) December...
-
Refer to the trial balance that follows for Edden Electrical for the year ended April 30, 2021. Instructions Use the trial balance to do the following: a. Prepare an income statement. b. Prepare a...
-
In this group activity, you will be provided with a skeleton classified balance sheet. Then, using the clues provided (including liquidity ratios) and the amounts from the statement, you will...
-
The following information is taken from the Fossil, Inc. 2015 annual report: Calculate Fossils actual and sustainable rate of growth in sales. How do the two rates of growth compare? What advice...
-
Presented below are selected financial data from the 2015 annual report of the Bristol-Myers Squibb Company: Required Using the ratio definitions from Exhibit 4.6, calculate the financial ratios for...
-
Presented below are selected financial data from the 2015 annual report of The Boeing Company: Required Using the ratio definitions from Exhibit 4.6, calculate the financial ratios for The Boeing...
Study smarter with the SolutionInn App