Deferred taxes Calculated tax expense, taxes payable and deferred tax amounts
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Deferred taxes Calculated tax expense, taxes payable and deferred tax amounts
Week 1 — Individual Assignment: Deferred Taxes — Due Mon, Day 7
All the information you need to compete this assignment is included.
YOU MUST COMPLETE AND SUBMIT THE ATTACHED EXCELWORKSHEET AS YOUR ASSIGNMENT!
** Anything else will not be accepted for this assignment **
- Do not significantly alter the formatting of the spreadsheet
- Do not delete tabs or columns
- Do not change column headers or descriptions
- Do not alter column width, formatting, shading or colors
- I have provided enough lines for entries (If you need to add rows then something is incorrect)
- Use the tab called “Work” for calculations (optional – not graded)
Submit the worksheet as your completed assignment.
Assignment:
WA Smith & Company had the following results of operations for the years 2013 thru 2017.
Year |
2013 |
2014 |
2015 |
2016 |
2017 |
Income before tax |
720,000 |
800,000 |
690,000 |
730,000 |
720,000 |
The company uses the asset-liability method to account for deferred taxes. The below table summarizes the differences in accounting between GAAP and tax regulations. Assume that these are the only deferred tax items over the 5 year period and that the company has a 40% tax rate each year.
Item |
2013 |
2014 |
2015 |
2016 |
2017 |
Total |
Depreciation |
||||||
Per books |
10,000 |
10,000 |
10,000 |
10,000 |
10,000 |
50,000 |
Per tax return |
50,000 |
– |
– |
– |
– |
50,000 |
Difference |
(40,000) |
10,000 |
10,000 |
10,000 |
10,000 |
– |
Interest revenue from municipal bonds |
||||||
Per books |
10,000 |
10,000 |
10,000 |
10,000 |
10,000 |
50,000 |
Per tax return |
– |
– |
– |
– |
– |
– |
Difference |
10,000 |
10,000 |
10,000 |
10,000 |
10,000 |
50,000 |
Royalty revenue |
||||||
Per books |
25,000 |
25,000 |
25,000 |
25,000 |
– |
100,000 |
Per tax return |
100,000 |
– |
– |
– |
– |
100,000 |
Difference |
(75,000) |
25,000 |
25,000 |
25,000 |
– |
– |
SECTION 1 – Calculation of tax expense, taxable payable & deferred tax amounts
Deliverables:
1(a) Calculate income tax expense for each year
1(b) Calculate income tax payable for each year
1(c) Calculate current and non-current deferred tax amounts for each year
1(d) Prepare the entries to record income tax expense, income tax payable and deferred taxes for 2013 and 2014
SECTION 2 – Presentation in financial statements
Deliverables:
2(a) Complete the summary income statements for each year
2(b) Compete the deferred tax amounts on the balance sheet for each year
SECTION 3 – Valuation allowance
Before closing the books for 2013, the company determines $2,000 of the deferred tax asset related to depreciation will not be realized.
Deliverables:
3(a) Record the entry for the deferred tax valuation allowance
3(b) Complete the balance sheet presentation for the deferred tax asset and valuation allowance
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