SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Account Titles and Explanation D
ID: 341303 • Letter: S
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SHOW LIST OF ACCOUNTS
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Account Titles and Explanation
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SHOW LIST OF ACCOUNTS
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SHOW LIST OF ACCOUNTS
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SHOW LIST OF ACCOUNTS
Grouper Company reports pretax financial income of $73,700 for 2017. The following items cause taxable income to be different than pretax financial income.1. Depreciation on the tax return is greater than depreciation on the income statement by $14,400. 2. Rent collected on the tax return is greater than rent recognized on the income statement by $19,900. 3. Fines for pollution appear as an expense of $11,400 on the income statement.
Grouper’s tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2017.
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$ Remarks 1 Pretax Income 73700 Less: Excess depreciation in income tax -14400 Deferred Tax Liability Add:Excess Rent Collected over earned 19900 Deferred Tax Asset Add: Non Deductible fine 11400 this is permanent difference, not timing differece hence not part of Deferred Taxable Income 90600 Income tax payable 30% 27180 2 Account Title Debit Credit Income Tax Expense (27180+4320-5970) 25530 Deferred Tax Asset (19900*30%) 5970 Deferred Tax Liability (14400*30%) 4320 Income Tax Payable (From Part-1) 27180 (Recorded Income Tax for 2017) 3 Income Statement $ Income Before income tax 73700 Income tax Expense-Current (From Part-1) 27180 Income Tax Expense-Deferred (4320-5970) -1650 25530 Net Income 48170 4 Effective Rate (Income tax expense/Pretax income) (27180-1650)/73700 34.64Related Questions
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