Chapter 19, Accounting for Income Taxes Video Solutions, Intermediate Accounting

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Problem 1

Explain the difference between pretax financial income and taxable income.

James Kiss

Numerade Educator

00:57

Problem 2

What are the two objectives of accounting for income taxes?

Kaylee Mcclellan

Numerade Educator

04:57

Interest on municipal bonds is referred to as a permanent difference when determining the proper amount to report for deferred taxes. Explain the meaning of permanent differences, and give two other examples.

Sarah Vo

Numerade Educator

02:09

Problem 4

Explain the meaning of a temporary difference as it relates to deferred tax computations, and give three examples.

Lottie Adams

Numerade Educator

00:56

Problem 5

Differentiate between an originating temporary difference and a reversing difference.

Alice .

Numerade Educator

12:05

Problem 6

The book basis of depreciable assets for Erwin Co. is $\$ 900,000,$ and the tax basis is $\$ 700,000$ at the end of 2011 The enacted tax rate is $34 \%$ for all periods. Determine the amount of deferred taxes to be reported on the balance sheet at the end of 2011.

Oluwadamilola Ameobi

Numerade Educator

04:53

Problem 7

Roth Inc. has a deferred tax liability of $\$ 68,000$ at the beginning of 2011 . At the end of 2011 , it reports accounts receivable on the books at $\$ 90,000$ and the tax basis at zero (its only temporary difference). If the enacted tax rate is $34 \%$ for all periods, and income tax payable for the period is $\$ 230,000,$ determine the amount of total income tax expense to report for 2011.

Puneet Prajapati

Numerade Educator

05:14

Problem 8

What is the difference between a future taxable amount and a future deductible amount? When is it appropriate to record a valuation account for a deferred tax asset?

Anas Venkitta

Numerade Educator

01:04

Problem 9

Pretax financial income for Lake Inc. is $\$ 300,000,$ and its taxable income is $\$ 100,000$ for 2011 . Its only temporary difference at the end of the period relates to a $\$ 70,000$ difference due to excess depreciation for tax purposes. If the tax rate is $40 \%$ for all periods, compute the amount of income tax expense to report in 2011 . No deferred income taxes existed at the beginning of the year.

Raj Bala

Numerade Educator

02:24

Problem 10

How are deferred tax assets and deferred tax liabilities reported on the balance sheet?

Mihir Nayar

Numerade Educator

01:26

Problem 11

Describe the procedures involved in segregating various deferred tax amounts into current and noncurrent categories.

Ameer Said

Numerade Educator

01:26

Problem 11

Describe the procedures involved in segregating various deferred tax amounts into current and noncurrent categories.

Ameer Said

Numerade Educator

02:55

Problem 12

How is it determined whether deferred tax amounts are considered to be "related" to specific asset or liability amounts?

Kaylee Mcclellan

Numerade Educator

01:32

Problem 13

At the end of the year, Falabella Co. has pretax financial income of $\$ 550,000 .$ Included in the $\$ 550,000$ is $\$ 70,000$ interest income on municipal bonds, $\$ 25,000$ fine for dumping hazardous waste, and depreciation of $\$ 60,000$. Depreciation for tax purposes is $\$ 45,000$. Compute income taxes payable, assuming the tax rate is $30 \%$ for all periods.

Oluwadamilola Ameobi

Numerade Educator

00:30

Problem 14

Addison Co. has one temporary difference at the beginning of 2010 of $\$ 500,000 .$ The deferred tax liability established for this amount is $\$ 150,000,$ based on a tax rate of $30 \%$. The temporary difference will provide the following taxable amounts: $\$ 100,000$ in $2011 ; \$ 200,000$ in $2012,$ and $\$ 200,000$ in
2013. If a new tax rate for 2013 of $20 \%$ is enacted into law at the end of 2010 , what is the journal entry necessary in 2010 (if any) to adjust deferred taxes?

Elizabeth Xu

Numerade Educator

02:26

Problem 15

What are some of the reasons that the components of income tax expense should be disclosed and a reconciliation between the effective tax rate and the statutory tax rate be provided?

Tommy Nguyen

Numerade Educator

02:22

Problem 16

Differentiate between "loss carryback" and "loss carryforward." Which can be accounted for with the greater certainty when it arises? Why?

Ameer Said

Numerade Educator

12:40

Problem 17

What are the possible treatments for tax purposes of a net operating loss? What are the circumstances that determine the option to be applied? What is the proper treatment of a net operating loss for financial reporting purposes?