Pretax accounting income â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦..$900,000
Excess tax depreciation â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦220,000
Litigation accrual â€¦â€¦â€¦â€¦â€¦..70,000
Unearned rent revenue deferred on the books but appropriately
recognized in taxable income â€¦â€¦â€¦â€¦.80,000
Interest income from New York municipal bonds â€¦â€¦40,000
1. Excess tax depreciation (tax exceeds financial reporting) will reverse equally over a four-year period, 2014-2017.
2. It is estimated that the litigation liability will be paid in 2016.
3. Rent revenue will be recognized during the last year of the lease, 2016.
4. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2016.
(a) Calculate the taxable income and taxes payable for 2013
(b) Prepare the journal entry for 2013
(c) Prepare a schedule of future taxable and (deductible) amounts.
(d) Prepare a schedule of the deferred tax (asset) and liability.
Note: Since this is the first year of operations, there is no beginning deferred tax asset or liability. Compute the net deferred tax expense (benefit).
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