bulan\'s Leasing Co. started operations in December 2017. When the ce to lessees

Question

bulan's Leasing Co. started operations in December 2017. When the ce to lessees, Julian's charges rent in advance (the term of the rent collected in advance varies depending on the space and the lessee). All of Julian's leasing contracts were signed as of December 31, 2017 and the lease term began on January 1, 2018 For tax purposes, the cash received in advance is taxable. For financial reporting purposes, the income will not be recognized until earned. The enacted tax rate is 40% tax rate for 2020 and 2021 is 35%. Pretax accounting income is $700,000 for each year for 2017, 2018, and 2019. The enacted 2/31/17. The table lists out the term of the leases. Revenue The following collections were made as of 1 for financial statement purposes will be recognized equally over the term of each lease. Cash Collected at 12/31/17 for Entire Term of Lease $60,000 $140,000 $180,000 Term of the Lease Rental Agreement # Rental Agreement 1 Rental Agreement 2 Rental Agreement 3 Rental Agreement4 -year(1/1/18-12/31/18) 2 years (1/1/18-12/31/19) 3 years (1/1/18-12/31/20) 4 years (1/1/18-12/31/21) 14240,00 Total Requirement 1: Prepare a table (e g Illustration 16-4) showing the calculation of taxable income for each year, and the temporary difference that either originates or reverses each year as well. Requirement 2: Prepare journal entries to record income tax expense at the end of 2017, 2018, 2019, 2020, and 2021. Show your work. You may set up a schedule (e g. Illustration 16-11) to calculate your income tax payable, income tax expense, and change needed in the deferred tax account. Remember that the income tax rate changes in 2020. You may need to attach additional paper with your work.

Explanation / Answer

Part 1 and Part 2

JOurnal:

Year 2017 2018 2019 2020 2021 Agreement-1 60000 0 0 Agreement-2 70000 70000 Agreement-3 60000 60000 60000 Agreement-4 60000 60000 60000 60000 Revenue recognised in books 0 250000 190000 120000 60000 Pretax Income 700000 700000 700000 700000 700000 Temporary Difference -Originates/(Reverse) 620000 -250000 -190000 -120000 -60000 Taxable Income 1320000 450000 510000 580000 640000 Tax Rate 40% 40% 40% 35% 35% Income Tax Payable (Taxable Income*Rate) 528000 180000 204000 203000 224000 Deferred Tax Asset/(Reversal of asset) 248000 -100000 -76000 -42000 -21000

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

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