On January 2, 2024, Tobias Company began using straight-line depreciation for a certain class of assets. In the past, the company had used double-declining-balance depreciation for these assets. As of January 2, 2024, the amount of the change in accumulated depreciation is $47,500. The appropriate tax rate is 25%. The separately reported change in 2024 earnings is:
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- Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and taxable income for 2020. The prior period adjustment was the result of an error in calculating bad debt expense for 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. When the company applies intraperiod income tax allocation, the prior period adjustment will be shown on the: a. income statement at 12,000 b. income statement at 8,400 (net of 3,600 income taxes) c. retained earnings statement at 12,000 d. retained earnings statement at 8,400 (net of 3,600 income taxes)Prior to and during 2019, Shadrach Company reported tax depreciation at an amount higher than the amount of financial depreciation, resulting in a book value of the depreciable assets of 24,500 for financial reporting purposes and of 20,000 for tax purposes at the end of 2019. In addition, Shadrach recognized a 3,500 estimated liability for legal expenses in the financial statements during 2019; it expects to pay this liability (and deduct it for tax purposes) in 2023. The current tax rate is 30%, no change in the tax rate has been enacted, and the company expects to be profitable in future years. What is the amount of the net deferred tax liability at the end of 2019? a. 300 b. 450 c. 1,050 d. 1,350Comprehensive Colt Company reports pretax financial income of 143,000 in 2019. In addition to pretax income from continuing operations (of which revenues are 295,000), the following items are included in this pretax income: Colts taxable income totals 93,000 in 2019. The difference between the pretax financial income and the taxable income is due to the excess of tax depreciation over financial depreciation on assets used in continuing operations. At the beginning of 2019, Colt had a retained earnings balance of 310.000 and a deferred tax liability of 8,100. During 2019, Colt declared and paid dividends of 48,000. It is subject to tax rates of 15% on the first 50,000 of income and 30% on income in excess of 50,000. Based on proper interperiod tax allocation procedures, Colt has determined that its 2019 ending deferred tax liability is 14,100. Required: 1. Prepare a schedule for Colt to allocate the total 2019 income tax expense to the various components of pretax income. 2. Prepare Colts income tax journal entry at the end of 2019. 3. Prepare Colts 2019 income statement. 4. Prepare Colts 2019 statement of retained earnings. 5. Show the related income tax disclosures on Colts December 31, 2019, balance sheet.
- Due to an error in computing depreciation expense, Prewitt Corporation overstated accumulated depreciation by $6 million as of December 31, 2018. Prewitt has a tax rate of 30%. Prewitt's retained earnings as of December 31, 2018, would be (Round million answer to 2 decimal places.):Crown Inc. reported P1,900,000 net income for the quarter ended September 30, 2021 which included the following after tax items: A P1,200,000 expropriation gain, realized on April 30, 2021, was allocated equally to the 2nd, 3rd and 4th quarters of 2021. A P300,000 cumulative-effect loss resulting from a change in inventory valuation method was recognized on August 1, 2021. On February 1, 2021, Peras Inc. paid P960,000 for 2021 calendar-year property taxes. One-fourth of the property taxes paid was allocated to the 3rd quarter of 2021. What amount should be reported as net income for the quarter ended September 30, 2021? A. 900,000B. 1,250,000C. 1,800,000D. 1,600,000Due to an error in computing depreciation expense, Crote Corporation understated accumulated depreciation by $54 million as of December 31, 2024. Crote has a tax rate of 20%. Crote's retained earnings as of December 31, 2024, would be:
- At the beginning of 2018, FECC Corporation had discovered that the depreciation expense inthe years prior to 2018 was incorrectly calculated and recorded. For the years before 2018,total depreciation expense of $165,000 was recorded, whereas correct total depreciationexpense was $75,000. The tax rate is 30%. FECC follows IFRS and the deferred taxes method ofaccounting for income taxes.Required:1) Prepare FECC’s 2017 journal entry with respect to the depreciation expense that wasrecorded in the years prior to 2018.For the year ended December 31, 2021, White Company reported pretax financial income of P5,000,000, while It’s taxable income amounts to P4,928,000. For the year 2021, the company’s book depreciation was P 268,000, while for tax purposes, the depreciation taken was P340,000. This temporary difference will reverse over the years 2022 through 2024 as follows: 2022-P28,000; 2023-P 25,000; 2024- P19,000. The enacted tax rates are as follows: 2021: 30% 2022: 32% 2023: 34% 2024: 36% How much deferred tax asset/deferred tax liability was reported by White Company on December 31, 2021? Deferred tax asset o P24,300 Deferred tax asset o P21,600 Deferred tax liability of P24,300 Deferred tax liability of P21,000For the year ended December 31, 2021, White Company reported pretax financial income of P5,000,000, while It’s taxable income amounts to P4,928,000. For the year 2021, the company’s book depreciation was P 268,000, while for tax purposes, the depreciation taken was P340,000. This temporary difference will reverse over the years 2022 through 2024 as follows: 2022-P28,000; 2023-P 25,000; 2024- P19,000. The enacted tax rates are as follows:2021: 30%2022: 32%2023: 34%2024: 36%How much deferred tax asset/deferred tax liability was reported by White Company on December 31, 2021? Choices: Deferred tax asset o P24,300 Deferred tax asset o P21,600 Deferred tax liability of P24,300 Deferred tax liability of P21,000
- For the year ended December 31, 2021, White Company reported pretax financial income of P5,000,000, while It’s taxable income amounts to P4,928,000. For the year 2021, the company’s book depreciation was P 268,000, while for tax purposes, the depreciation taken was P340,000. This temporary difference will reverse over the years 2022 through 2024 as follows: 2022-P28,000; 2023-P 25,000; 2024- P19,000. The enacted tax rates are as follows: 2021: 30% 2022: 32% 2023: 34% 2024: 36% How much deferred tax asset/deferred tax liability was reported by White Company on December 31, 2021?Current Attempt in Progress In 2023, Crane Ltd., which follows IFRS, reported accounting income of $960,000 and the 2023 tax rate was 20%. Crane had two timing differences for tax purposes: CCA on the company's tax return was $450,000. Depreciation expense on the financial statements was $280,000. These amounts relate to assets that were acquired on January 1, 2023, for $1,800,000. Accrued warranty expense for financial statement purposes was $132,000 (accrued expenses are not deductible for tax purposes). This is the first year Crane offers warranties. Both of these timing differences are expected to fully reverse over the next four years, as follows: Year 2024 2025 2026 2027 (a) Depreciation Difference $55,000 45,000 40,000 30,000 Warranty Expense Rate $18,000 20% 28,000 20% 38,000 18% 48.000 18% $170.000 $132,000 Calculate income taxes payable for 2023. Income taxes payable $At the beginning of 2025, Pronghorn Construction Company changed from the cost-recovery method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the cost- recovery method for tax purposes. For years prior to 2025, pretax income under the two methods was as follows: percentage-of-completion $114,200, and cost-recovery $78,200. The tax rate is 40%. Pronghorn has a profit-sharing plan, which pays all employees a bonus at year-end based on 2% of pretax income. Compute the indirect effect of Pronghorn's change in accounting principle that will be reported in the 2025 income statement, assuming that the profit-sharing contract explicitly requires adjustment for changes in income numbers. Indirect effect