you are required to prepare the tax return report for your manager at the end of 2020,
Question:
you are required to prepare the tax return report for your manager at the end of 2020, while examining the differences between tax report and financial report you have concluded the following differences:
1. A differences originated in 2020 during to excess expenses per tax compared to book purposes total of 4,000 which will be reversed entirely in 2022.
2. The company paid a donation total of 7,000 as a grant during children benefit during 2020.
3. A difference originated in 2019 of total rent revenues deferred for tax purpose till collected total of 12,000. This amount was collected entirely during 2020.
4. A differences originated in 2020 related to excess depreciation per book compared to tax return of total 18,000, this will be reversed equally over the upcoming 2 years after 2020
5. During the year of 2019 the company collected 12,000 rentals in advance which will be accrued for financial reporting purposes during 2020 and 2021 equally.
- An installment sale recorded during 2021 total of 10,000. This was collected over two years (2021 and 2021) 5,000 each.
- The company received a government grant which is not taxable during 2021 total of 2,000$
- A differences originated in 2020 during to excess expenses per tax compared to book purposes total of 4,000 which will be reversed entirely in 2022.
- Assume that tax rates for 2018, 2019 was 40%. And all years starting 2020 is 38%(which is enacted at the beginning of 2020)
- Taxable income for the years of 2018,2019,2020,2021 and 2022 was as follows respectively; $230,000, $300,000, $370,000, $350,000 and $400,000.
- Those are all differences and the company had no other differences.
Requirements:
- You are required to calculate pretax income for all years; 2018,2019,2020,2021 and 2021
- You are required to calculate the balance of DTA at the end of all years; 2018,2019,2020,2021 and 2021
- You are required to calculate the balance of DTL at the end of all years; 2018,2019,2020,2021 and 2021
- You are required to indicate the deferred portion of income tax expense for all years; 2018,2019,2020,2021 and 2021
- You are required to prepare all the journal entries for all years; 2018,2019,2020,2021 and 2021
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott