ld Industries has pretax accounting income of $70 million for the year ended Dec

Question

ld Industries has pretax accounting income of $70 million for the year ended December 31, 2018. The tax rate is 40%. The only difference between accounting income and taxable Income relates to an operating lease in which Arnold is the of the lease was December 28, 2018. An $20 million advance rent payment at the Inception of the lease is tax-deductible in 2018 but, lessee. The inception for financial reporting purposes, represents prepaid rent expense to be recognized equally over the four-year lease term. Required: 1. Complete the following table given below and prepare the appropriate journal entry to record Arnold's income taxes for 2018. 2. Prepare the appropriate journal entry to record Arnold's income taxes for 2019. Pretax accounting income was $58 million for the year ended December 31, 2019. 3. Assume a new tax law is enacted in 2019 that causes the tax rate to change from 40% to 30% beginning in 2018, complete the following table given below and prepare the appropriate journal entry to record Arnold's income taxes for 2019. Complete this question by entering your answers in the tabs below. Required 1 Calculation Required 1 G) Required 2 Required 3 Required 2 Calculation Required 3 GJ Assume a new tax law is enacted in 2019 that causes the tax rate to change from 40% to 30% beginning in 2018, Complete the following table given below to record Arnold's income taxes for 2019. (Enter your answers in millions rounded to 1 decimal place (.e,5,500,000 should be entered as 5.5).) Tax Rate%! | 40%| -| $ 20.0 30%) =| $ 18.6 ($in millions).. Tat Recorded as 50.0 x Temporary Difference-Beginning of Year· Temporary Difference- End of Year Change in Deferred Tax account Income taxable in current year S 62.0x =| $ 0.01 Required 2 Required 3GJ Prev 3013 Next

Explanation / Answer

Req 3:

Temporary difference - Beginning of year 50 * 40% = $20 Deferred tax liability - beginning

Temporary difference - End of year 62 * 30% = $18.60 Deferred tax liability - end   

Change in Deferred Tax account = $(1.40) Change in deferred tax liability

Income taxable in current year 46(58 + 50 - 62) * 40% = $18.40 Income tax payable

Journal entry :

Income tax expense 17.00

Deferred tax liability 1.40

Income tax payable 18.40

* Table for req 1 is not shown so assumed that only part 3 is required.

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.