Exercise 18-23 At the end of 2016, Concord Corporation reported a deferred tax l
ID: 2538711 • Letter: E
Question
Exercise 18-23
At the end of 2016, Concord Corporation reported a deferred tax liability of $43,000. At the end of 2017, the company had $245,000 of temporary differences related to property, plant, and equipment. Depreciation expense on this property, plant, and equipment has been lower than the CCA claimed on Concord’s income tax returns. The resulting future taxable amounts are as follows:
2018
$79,000
2019
63,000
2020
56,000
2021
47,000
$245,000
The tax rates enacted as of the beginning of 2016 are as follows: 32% for 2016 and 2017; 31% for 2018 and 2019; and 26% for 2020 and later. Taxable income is expected in all future years.
Calculate the deferred tax account balance at December 31, 2017.
Prepare the journal entry for Concord to record deferred taxes for 2017.
Early in 2018, after the 2017 financial statements were released, new tax rates were enacted as follows: 30% for 2018 and 28% for 2019 and later.
Prepare the journal entry for Concord to recognize the change in tax rates.
2018
$79,000
2019
63,000
2020
56,000
2021
47,000
$245,000
Explanation / Answer
Solution :
Concord Corporation Computation of Deferred Tax balance at December 31, 2017 Year Reversal of temporary differences - Depreciation Tax Rate Deferred Tax Liability 2018 $79,000.00 31% $24,490.00 2019 $63,000.00 31% $19,530.00 2020 $56,000.00 26% $14,560.00 2021 $47,000.00 26% $12,220.00 $245,000.00 $70,800.00Related Questions
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