How the deferred taxes will appear on the balance sheet
Course:- Accounting Basics
Reference No.:- EM13134204

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Accounting Basics

Buffy, Inc. qualifies to use the installment-sales method for tax purposes and sold an investment on an installment basis. The total gain of $90,000 was reported for financial reporting purposes in the period of sale. The installment period is 3 years; one third of the sale price is collected in 2012 and the rest in 2013. The tax rate was 40% in 2012, 35% in 2013, and 35% in 2014. The accounting and tax data is shown below.
Financial Accounting Tax Return
Income before temporary difference $200,000 $200,000
Temporary difference $90,000 $30,000
Income $290,000 $230,000

Income before temporary difference $230,000 $230,000
Temporary difference $- $30,000
Income $230,000 $260,000

Income before temporary difference $195,000 $195,000
Temporary difference $- $30,000
Income $195,000 $225,000

1) Prepare the journal entries to record the income tax expense, deferred income taxes, and the income taxes payable for 2012, 2013, and 2014. No deferred income taxes existed at the beginning of 2012.
2) Explain how the deferred taxes will appear on the balance sheet at the end of each year. (Assume Installment Accounts Receivable is classified as a current asset.)
3) Show the income tax expense section of the income statement for each year, beginning with "Income before income taxes."

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
Based on these data, prepare a multi step income statement for internal reporting purposes (showing all appropriate subtotals and totals). What was the amount of gross profit?
All-inclusive and current operating performance concepts of income represent opposing views regarding the inclusion of items to be reported in earnings on the income stateme
Create a table in which you list what is to be communicated, who will communicate it, to whom will it be communicated, how often it will be communicated and through what med
Deana Moran is the owner of First Delivery Service. Recently, Deana paid interest of $3,600 on a personal loan of $60,000 that she used to begin the business. Should First
Review the Standard costs: wake up and smell the coffee.article. When evaluating performance, many organizations compare current results with the actual results of previous
Globe uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of B2 would be assigned overhead of:
Woodwick Company issues 10%, five year bonds, on December 31, 2012, with a par value of $200,000 and semiannual interest payments. Use the following bond amortization table an
Assume that the firm is in stable growth, growing 5 percent a year forever; estimate the firm's reinvestment rate. Given this reinvestment rate, estimate the value of the firm