Accounting for Income Taxes

Anonymous
timer Asked: Mar 17th, 2019
account_balance_wallet $15

Question Description

1. Whispering Corporation began 2017 with a $42,000 balance in the Deferred Tax Liability account. At the end of 2017, the related cumulativetemporary difference amounts to $188,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2017 is $392,000, the tax rate for all years is 40%, and taxable income for 2017 is $311,000.

2.

The following facts relate to Sarasota Corporation.



1.
Deferred tax liability, January 1, 2017, $84,000.
2.
Deferred tax asset, January 1, 2017, $0.
3.
Taxable income for 2017, $179,000.
4.
Pretax financial income for 2017, $395,000.
5.
Cumulative temporary difference at December 31, 2017, giving rise to future taxable amounts, $463,000.
6.
Cumulative temporary difference at December 31, 2017, giving rise to future deductible amounts, $73,000.
7.
Tax rate for all years, 40%.
8.
The company is expected to operate profitably in the future.

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