5) Prepare journal entry(ies) for lessor on Jan.1, 2012. 4. A magazine publisher

Question

5) Prepare journal entry(ies) for lessor on Jan.1, 2012. 4. A magazine publisher collects one year in advance for subscription revenue. 1) In the year of colleting cash from customers: Which of the following incomes is higher? Pretax accounting income Tax expense Increase/Decrease Deferred tax asset/Deferred tax liability Taxable income Which of the following accounts is higher? Tax payable The company would record: 2) In the year of providing the magazines to customers: Which of the following incomes is higher? Taxable income Pretax accounting income Tax expense Increase/Decrease Deferred tax asset/Deferred tax liability Which of the following accounts is higher? Tax payable The company would record

Explanation / Answer

4)1 subscription revenue received will be taxable in year of receipts whereas for accounting purpose it will be taxable over the period of benefit

a)Taxable income

b)Tax payable

c)Increase in deferred tax asset

5)pretax accounting income    [as income is recognised in accounts but already recognised for tax purpose in year of receipt

Tax expense

Decrease in deferred tax asset

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