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connect.html Search. Connect @ File Edit View Favorites Tools Help * a labsBalser. Annarose : Outloo..Canvas Connect New tab Ch. 16 Homework Problems Help Save & Exit Submit 5 Check my work Problem 16-9 Determine deferred tax assets and liabilities [L016-6] Corning-Howell reported taxable income in 2018 of $100 million. At December 31, 2018, the reported amount of some assets and liabilities in the financial statements differed from their tax bases as indicated below 10 points Carrying Amount Tax Basis Assets Current S 11 million S 14 million Net accounts receivable Prepaid insurance Prepaid advertising Print 21 million 3 million Noncurrent Investments at fair value with changes in oCI Buildings and equipment (net) million 300 million 260 million Liabilities Current Liability-subscriptions received 12 million Long-term Liability-postretirement benefits 505 million 1134 PM /16/2018 O Type here to search

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1 Deferred Tax assets and Liabilities Deferred Tax Asset: Working $ Million Bad Debt Allowance (11-14)*40% 1.2 Subscription Liability 12*40% 4.8 Post Retirment Benefit 505*40% 202 Deferred Tax Asset: 208 Deferred Tax Liability: Prepaid Insurance 21*40% 8.4 Prepaid Advertising 3*40% 1.2 Investment Realisation gain 6*40% 2.4 Building (300-260)*40% 16 Deferred Tax Liability 28 2 Increase or Decrease Deferred Tax Asset Deferred Tax Liability Closing Balance (From 1) 208 28 Less:Beginning Balance 210 20 Increase (Decrease) -2 8 3 Tax Payable Taxable income*40% 100*40%=40 M 4 Journal Debit Credit Tax Expense (40+8+2) 50 Deferred Tax Asset (Decrease in asset, hence credit) 2 Deferred Tax Liability 8 Taxes Payable (100*40%) 40

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