Intermediate accounting by robles empleoanswers v2chapter 5 2012

Temporary difference – Future deductible amount 5-2... Bohol Company Future deductible amount: Book depreciation in excess of tax depreciation 430,000 Nontaxable income: Proceeds f

PROBLEMS 5-1 a Nontaxable

b Nondeductible

c Nondeductible

d Temporary difference – Future taxable amount

e Temporary difference – Future taxable amount

f Temporary difference – Future deductible amount

g Temporary difference – Future deductible amount

5-2

Add Nondeductible expenses (b + c) 600,000 + 40,000 640,000

Add Future deductible amounts (f + g) 750,000 + 400,000 1,150,000 Less Future taxable amounts (d + e) 1,500,000 + 1,000,000 (2,500,000)

30% x 7,290,000

30% x 2,500,000

30% x 1,150,000

or one compound entry may be made as follows:

5-3 (Luzon Corporation)

Income tax payable: 30% x 1,200,000 P360,000

30% x 1,200,000 = 360,000 30% x 1,800,000 = 540,000

5-4 (Visayas Corporation)

Income tax payable: 30% x 3,550,000 P1,065,000

Deferred tax asset 465,000

Income tax eenefit-Deferred 465,000 5-5 (Mindanao Corporation)

Income tax expense – Current 1,560,000

Income tax expense – Deferred (Benefit) 415,000

30% x 5,200,000 = 1,560,000 30% x 2,000,000 = 600,000 (30% x 500,000) + (35% x 100,000) = 185,000 5-6 (Samar, Inc.)

Income tax expense – Current (30% x 2,000,000) P 600,000 Income tax expense – Deferred (180,000 – 159,000) (21,000)

Deferred tax asset: 30% x (360,000 + 240,000) P 180,000

5-7 (Bohol Company)

Future deductible amount:

Book depreciation in excess of tax depreciation (430,000) Nontaxable income:

Proceeds from life insurance policy upon death of officer 1,250,000

5-8 (Wall Services)

(a) Schedule of reversal of the temporary differences

Pretax financial income P2,200,000 Add nondeductible expenses 400,000

Deferred tax liability (see above) P 240,000

(b) Income tax expense – Current 528,000

(c) Income from continuing operations before income tax P2,200,000

Income tax expense:

Deferred 240,000 768,000

5-9 (Daniel Company)

(a)

Additional taxable amount

(b) Deferred tax liability at the end of each year is as follows:

(c) Journal entries to record current income tax:

Income tax expense-Current 240,000 267,000

(30% x 800,000) (30% x 890,000)

2014 2015 Income tax expense-Current 360,000 450,000 Income tax payable 360,000 450,000

(30% x 1,200,000) (30% x 1,500,000)

Journal entries to record deferred income tax:

December 31, 2012:

December 31, 2013:

120,000 – 90,000 = 30,000

December 31, 2014:

Income tax expense-Deferred (Benefit) 30,000 90,000 – 120,000 = 30,000 decrease

December 31, 2015:

Deferred tax liability 90,000

Income tax expense-Deferred (Benefit) 90,000

0 – 90,000 = 90,000 Decrease (d)

Income tax expense:

Current P 240,000 P 267,000 P 360,000 P 450,000 Deferred (Benefit) 90,000 30,000 ( 30,000) (90,000) Total income tax

expense P 330,000 P 297,000 P 330,000 P 360,000 (e)

Less income tax

expense (see above) 330,000 297,000 330,000 360,000 Net income P 770,000 P 693,000 P 770,000 P 840,000 5-10 (Jude Company)

(a) Future taxable amount

Carrying amount of inventories > Tax Base P 100,000 Carrying amount of building & equipment > Tax Base 1,800,000

P 1,900,000 Future Deductible Amount

Carrying amount of accounts receivable < Tax Base P200,000

Carrying amount of warranty > Tax Base 800,000 Carrying amount of unearned rent > Tax Base 500,000

P 1,500,000

Deferred tax assets (1,500,000 x 30%) P 450,000 Deferred tax liability (1,900,000 x 30%) P 570,000 (c) Income tax expense-Current 1,500,000

Income tax expense-Deferred 75,000

450,000 – 525,000

Deferred tax liability 830,000 Income tax benefit-Deferred 830,000

1,400,000 – 570,000 5-11 (Capetown Company)

Tax rate = 180,000/600,000 = 30%

30% x 1,000,000

End (30% x 800,000) = 240,000

Beg 180,000

Increase 60,000

5-12 (Conchita Corporation)

(a) Deferred tax liability, 12/31/2012

(b) Income tax expense – current 900,000

3M x 30%

Beg 640,000 End, revised due to

change in tax rate 600,000 Decrease in DTL 40,000 5-13 (Britanny Company)

(b) Income tax expense – current 400,000

DTL, 12/31/12 (400,000 x 30%) 120,000

DTA, 12/31/12 (200,000 x 30%) 60,000

(c) Total income tax expense

Total income tax expense P900,000

MULTIPLE CHOICE QUESTIONS Theory

Problems

35%)] = 700,000 – 500,000 = 200,000 (all non-current)

5,500,000 x 30% = 1,650,000

52,500 + 52,500 + 45,000 = 150,000

they will not reverse simultaneously

2,500,000 x 30% = 750,000

Items 36 and 37:

Income tax expense

Less: increase in deferred tax asset