There are 3 chapters of work. 3 homeworks and 3 class exercises. The homework is on the excel spreadsheets PLEASE show ALL work and when asked to comprehensive questions PLEASE give much knowledgeable detail. For the in class exercises please do them all on 1 excel spread sheet and make each exercises on a different tab of the excel. On the class exercise please show all work as well and if given multiple choice please show work and or explain how you got the answer. Thank you!!
Q1 1. For each item below, indicate whether it involves: (1) A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. (2) A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. Use the appropriate number to indicate your answer for each.Answer (a) For some assets, straight-line depreciation is used for tax purposes while double-declining balance method is used for financial reporting purposes. (b) Warranty expenses are accrued when the sale is made, but cannot be deducted until the work is actually performed. (c) Accelerated depreciation for tax purposes, and the straight-line depreciation method is used for financial reporting purposes for some equipment. (d) A landlord collects some rents in advance. Rents received are taxable in the period when they are received. (e) For financial reporting purposes, an estimated loss from a lawsuit is accrued. The tax return will not report a deduction until an amount is paid. (f) A liability for a guarantee is accrued for financial reporting purposes. (g) Installment sales are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. Q2 2. The following information is available for XYZ Inc. for 2014. 1). Excess of tax depreciation over book depreciation, $80,000. This $80,000 difference will reverse equally over the next 4 years. 2). Deferral, for book purposes, of $25,000 of subscription income received in advance. The subscription income will be earned in 2015. 3). Pretax financial income, $160,000. 4. Tax rate for all years, 35%. Instructions (a) Compute taxable income for 2014. (b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2014. (c) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015, assuming taxable income of $255,000 (a) (b) (c ) Q3 Skim through chapter 19 and answre the following questions 1. Is the amount of tax expense reported by a company the same as the amount of taxes payable to the IRS? Explain. 2. What is pretax financial income? 3. What is taxable income? 4. Define a temporary difference 5. Define “deferred tax liability”. 6. What are the two components of income tax expense? 7. Define “deferred tax asset” 8. When can a firm reduce a deferred tax asset by a valuation allowance? 9. What is the formula to compute income tax expense? 10. What is a permanent difference? 11. What is an operating loss? 12. What is the rule for loss carryback/carryforward? Q1 1. NovaSci, Inc. has a deferred tax asset account with a balance of $255,000 at the end of 2013 due to a single cumulative temporary difference of $850,000. At the end of 2014 this same temporary difference has decreased to a cumulative amount of $750,000. Taxable income for 2014 is $650,000. The tax rate is 30% for all years. No valuation account related to the deferred tax asset is in existence at the end of 2013. (a) Record income tax expense, deferred income taxes, and income taxes payable for 2014, assuming that it is more likely than not that the deferred tax asset will be realized. (b) Assuming that it is more likely than not that one-half of the total deferred tax asset will not be realized, prepare the journal entry at the end of 2014 to record the valuation account. Q2 2. (NOL Carryforward, Valuation Account versus No Valuation Account) Public Wares Corporation reports the following pretax income (loss) for both financial reporting purposes and tax purposes. (Assume 2013 is the company’s first year of operations.) Year Pretax Income (Loss) Tax Rate 2013$230,00040% 2014-335,00040% 2015-50,00040% 2016265,00040% Prepare the journal entries for the years 2013 through 2016 to record income tax expense (benefit) and income tax payable. and the tax effects of the loss carryforward, assuming that the benefits of any loss carryforwards are judged more likely than not to be realized in the future.