*Problem 19-1 No deferred taxes existed at the beginning of 2017. The following
ID: 2334023 • Letter: #
Question
*Problem 19-1
No deferred taxes existed at the beginning of 2017.
The following information is available for Oriole Corporation for 2017.1. Depreciation reported on the tax return exceeded depreciation reported on the income statement by $130,000. This difference will reverse in equal amounts of $32,500 over the years 2018–2021. 2. Interest received on municipal bonds was $10,100. 3. Rent collected in advance on January 1, 2017, totaled $60,900 for a 3-year period. Of this amount, $40,600 was reported as unearned at December 31, 2017, for book purposes. 4. The tax rates are 40% for 2017 and 35% for 2018 and subsequent years. 5. Income taxes of $314,000 are due per the tax return for 2017. 6.
No deferred taxes existed at the beginning of 2017.
Your answer is correct. Compute taxable income for 2017.Taxable income for 2017 $
785000
Your answer is correct. Compute pretax financial income for 2017.Pretax financial income for 2017 $
884500
2017Income Tax Expense
Deferred Tax Liability
45500
2018 Prepare the income tax expense section of the income statement for 2017, beginning with “Income before income taxes.” (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)Oriole Corporation
Income Statement (Partial)
For the Year Ended December 31, 2017
Income before Income Taxes
$884500
Income Tax Expense
Current
$314000
Deferred
31290
345290
Net Income / (Loss)
$539210
Explanation / Answer
SOLUTION
A.Taxable income = $314,000 / 40% = $785,000
B.
C.
D.
Bridgeport Corporation
Income Statement (Partial)
For the Year Ended December 31, 2017
Particulars Amount ($) Taxable Income 785,000 Permanent Differences- Interest on Municipal Bonds 10,100 Temporary Differences- Excess Depreciation 130,000 Unearned Rent (40,600) Pretax financial Income 884,500Related Questions
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