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Chapter 19: Q6IFRS (page 1114)

At December 31, 2017, Hillyard Corporation has a deferred tax asset of \(200,000. After a careful review of all available evidence, it is determined that it is probable that \)60,000 of this deferred tax asset will not be realized. Prepare the necessary journal entry.

Short Answer

Expert verified

Income tax expense will be debited and deferred tax asset will be credited by $60,000, respectively.

Step by step solution

01

Meaning of Income-tax

Income tax expense refers to the amount computed on total income, and payable to taxing authority.

02

Preparing journal entries.

Date

Particulars

Debit ($)

Credit ($)

Income tax expense

60,000

Deferred tax asset

60,000

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Most popular questions from this chapter

Explain the difference between pretax financial income and taxable income.

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?

The amount of income taxes due to the government for a period of time is rarely the amount reported on the income statement for that period as income tax expense. (c) List the steps in the annual computation of deferred tax liabilities and assets.

At the end of 2016, Lucretia McEvil Company has \(180,000 of cumulative temporary differences that will result in reporting the following future taxable amounts. 2017 \) 60,000 2018 50,000 2019 40,000 2020 30,000 \(180,000Tax rates enacted as of the beginning of 2015 are: 2015 and 2016 40% 2017 and 2018 30% 2019 and later 25% McEvil鈥檚 taxable income for 2016 is \)320,000. Taxable income is expected in all future years. Instructions (a) Prepare the journal entry for McEvil to record income taxes payable, deferred income taxes, and income tax expense for 2016, assuming that there were no deferred taxes at the end of 2015. (b) Prepare the journal entry for McEvil to record income taxes payable, deferred income taxes, and income tax expense for 2016, assuming that there was a balance of $22,000 in a Deferred Tax Liability account at the end of 2015.

The pretax financial income of Truttman Company differs from its taxable income throughout each of 4 years as follows. Pretax Taxable Year Financial Income Income Tax Rate 2017 \(290,000 \)180,000 35% 2018 320,000 225,000 40 2019 350,000 260,000 40 2020 420,000 560,000 40

Pretax financial income for each year includes a nondeductible expense of $30,000 (never deductible for tax purposes). The remainder of the difference between pretax financial income and taxable income in each period is due to one depreciation temporary difference. No deferred income taxes existed at the beginning of 2017. Instructions (a) Prepare journal entries to record income taxes in all 4 years. Assume that the change in the tax rate to 40% was not enacted until the beginning of 2018. (b) Prepare the income statement for 2018, beginning with Income before income taxes.
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