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Chapter 19: Question 6BE (page 1093)

At December 31, 2017, Percheron Inc. had a deferred tax asset of \(30,000. At December 31, 2018, the deferred tax asset is \)59,000. The corporation鈥檚 2018 current tax expense is $61,000. What amount should Percheron report as total 2018 income tax expense?

Short Answer

Expert verified

Income tax expenseis an organization'sexpenditureon itstotal revenue.Theeffective tax rateon theincome slab is multipliedto obtain thetax amount.

Step by step solution

01

Given the amounts as

Particulars

Amount

Deferred tax asset for 2017

$30,000

Deferred tax asset for 2018

$59,000

Current tax expense

$61,000

02

Computation of income tax expense for 2018

Particulars

Amount

Deferred tax asset for 2018

$59,000

Less: Deferred tax asset for 2017

$30,000

Deferred tax benefit for 2018

($29,000)

Add: Current tax expense

$61,000

Income tax expense for 2018

$32,000

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Most popular questions from this chapter

Addison Co. has one temporary difference at the beginning of 2017 of \(500,000. The deferred tax liability established for this amount is \)150,000, based on a tax rate of 30%. The temporary difference will provide the following taxable amounts: \(100,000 in 2018, \)200,000 in 2019, and $200,000 in 2020. If a new tax rate for 2020 of 20% is enacted into law at the end of 2017, what is the journal entry necessary in 2017 (if any) to adjust deferred taxes?

Use the information for Rode Inc. given in BE19-13. Assume that it is more likely than not that the entire net operating loss carryforward will not be realized in future years. Prepare all the journal entries necessary at the end of 2017.

South Carolina Corporation has one temporary difference at the end of 2017 that will reverse and cause taxable amounts of \(55,000 in 2018, \)60,000 in 2019, and \(65,000 in 2020. South Carolina鈥檚 pretax financial income for 2017 is \)300,000, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2017. Instructions (a) Compute taxable income and income taxes payable for 2017. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017. (c) Prepare the income tax expense section of the income statement for 2017, beginning with the line 鈥淚ncome before income taxes.鈥�

Assume the same information as E19-12, except that at the end of 2016, Jennifer Capriati Corp. had a valuation account related to its deferred tax asset of $45,000. Instructions (a) Record income tax expense, deferred income taxes, and income taxes payable for 2017, assuming that it is more likely than not that the deferred tax asset will be realized in full. (b) Record income tax expense, deferred income taxes, and income taxes payable for 2017, assuming that it is more likely than not that none of the deferred tax asset will be realized.

The following facts relate to Krung Thep Corporation. 1. Deferred tax liability, January 1, 2017, \(40,000. 2. Deferred tax asset, January 1, 2017, \)0. 3. Taxable income for 2017, \(95,000. 4. Pretax financial income for 2017, \)200,000. 5. Cumulative temporary difference at December 31, 2017, giving rise to future taxable amounts, \(240,000. 6. Cumulative temporary difference at December 31, 2017, giving rise to future deductible amounts, \)35,000. 7. Tax rate for all years, 40%. 8. The company is expected to operate profitably in the future. Instructions (a) Compute income taxes payable for 2017. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017. (c) Prepare the income tax expense section of the income statement for 2017, beginning with the line 鈥淚ncome before income taxes.鈥�
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