Presented below are two independent situations related to future taxable and ded
ID: 2416344 • Letter: P
Question
Presented below are two independent situations related to future taxable and deductible amounts resulting from temporary differences existing at December 31, 2014.
1. Mooney Co. has developed the following schedule of future taxable and deductible amounts.
2015
2016
2017
2018
2019
2. Roesch Co. has the following schedule of future taxable and deductible amounts.
2015
2016
2017
2018
Both Mooney Co. and Roesch Co. have taxable income of $5,500 in 2014 and expect to have taxable income in all future years. The tax rates enacted as of the beginning of 2014 are 32% for 2014–2017 and 36% for years thereafter. All of the underlying temporary differences relate to noncurrent assets and liabilities.
1. Compute the net amount of deferred income taxes to be reported at the end of 2014, and indicate how it should be classified on the balance sheet for situation one.
MOONEY CO.
Balance Sheet
December 31, 2014
2. Compute the net amount of deferred income taxes to be reported at the end of 2014, and indicate how it should be classified on the balance sheet for situtation two.
ROESCH CO.
Balance Sheet
December 31, 2014
2015
2016
2017
2018
2019
Taxable amounts $200 $200 $200 $200 $200 Deductible amount — — — (1,800 )Explanation / Answer
Temporary Difference Future Taxable (Deductible) Amounts Tax Rate Deferred Tax (Asset) Liability 2015 200 32% $64 2016 200 32% $64 2017 200 32% $64 2017 (2,800) 32% (896) 2018 200 36% $72 Totals (2,000) (896) 264
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