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Chapter 19: 9Q (page 1093)

Feagler Company鈥檚 current income taxes payable related to its taxable income for 2017 is \(460,000. In addition, Feagler鈥檚 deferred tax asset decreased \)20,000 during 2017. What is Feagler鈥檚 income tax expense for 2017?

Short Answer

Expert verified

An assetis a column in the organization's balance sheet that considers the future benefits of an organization in the form of cash. It is also used in various turnover ratios.

Step by step solution

01

Given the amounts as

Particulars

Amount

Taxable income

$460,000

Deferred tax asset

$20,000

02

Calculation of income tax expense for 2017

Incometaxexpense=Taxableincome+Deferredtaxasset=$460,000+$20,000=$480,000

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Most popular questions from this chapter

Question: Interest on municipal bonds is referred to as a permanent difference when determining the proper amount to report for deferred taxes. Explain the meaning of permanent differences, and give two other examples.

The differences between the book basis and tax basis of the assets and liabilities of Castle Corporation at the end of 2016 are presented below. Book Basis Tax Basis Accounts receivable \(50,000 \)鈥�0鈥� Litigation liability 30,000 鈥�0鈥� It is estimated that the litigation liability will be settled in 2017. The difference in accounts receivable will result in taxable amounts of \(30,000 in 2017 and \)20,000 in 2018. The company has taxable income of $350,000 in 2016 and is expected to have taxable income in each of the following 2 years. Its enacted tax rate is 34% for all years. This is the company鈥檚 first year of operations. The operating cycle of the business is 2 years. Instructions (a) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2016. (b) Indicate how deferred income taxes will be reported on the balance sheet at the end of 2016.

Question: What are the two basic requirements applied to the measurement of current and deferred income taxes at the date of the financial statements?

The following facts relate to Duncan Corporation. 1. Deferred tax liability, January 1, 2017, \(60,000. 2. Deferred tax asset, January 1, 2017, \)20,000. 3. Taxable income for 2017, \(105,000. 4. Cumulative temporary difference at December 31, 2017, giving rise to future taxable amounts, \)230,000. 5. Cumulative temporary difference at December 31, 2017, giving rise to future deductible amounts, $95,000. 6. Tax rate for all years, 40%. No permanent differences exist. 7. The company is expected to operate profitably in the future. Instructions (a) Compute the amount of pretax financial income 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� (d) Compute the effective tax rate for 2017.

(Explain Future Taxable and Deductible Amounts, How Carryback and Carryforward Affects Deferred Taxes) Maria Rodriquez and Lynette Kingston are discussing accounting for income taxes. They are currently studying a schedule of taxable and deductible amounts that will arise in the future as a result of existing temporary differences. The schedule is as follows.

Future Years

2017

2018

2019

2020

2021

Taxable income

\(850,000

Taxable amounts

\)375,000

\(375,000

\)375,000

$375,000

Deductible amounts

(2,400,000)

Enacted tax rate

50%

45%

40%

35%

30%

Instructions

  1. Explain the concept of future taxable amounts and future deductible amounts as illustrated in the schedule.
  2. How do the carryback and carryforward provisions affect the reporting of deferred tax assets and deferred tax liabilities?
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