Wicks Corporation began operations on January 1, 2010. At the end of 2010, the company reported pretax financial income of $60,000 and taxable income of $57,700, due to two temporary differences. The income tax rate is 30% for 2010 through
Wicks Corporation began operations on January 1, 2010. At the end of 2010, the company reported pretax financial income of $60,000 and taxable income of $57,700, due to two temporary differences. The income tax rate is 30% for 2010 through 2012, but Congress has enacted a tax rate of 35% for 2013 and beyond. To determine its deferred taxes, the company prepared the following schedule of expected future taxable and deductible amounts for the two temporary differences:
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Required
1. Prepare the income tax journal entry of the Wicks Corporation at the end of 2010. Assume a valuation allowance is not required.
2. Prepare the lower portion of the 2010 income statement for the WicksCorporation.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Future taxable amounts Future deductible amount 2011 $4,900 2012 $4,200 2013 S 4,600 (15,500) 2014 $4,100
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1 2010 Dec 31 Income Tax Expense Deferred Tax Asset 57 700 x 0 30 Taxable amoun…View the full answer
Intermediate Accounting
ISBN: 978-0324659139
11th edition
Authors: Loren A. Nikolai, John D. Bazley, Jefferson P. Jones
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