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Student Name: Instructor Class: McGraw-Hill/Irwin Problem 16-04 ZEKANY CORPORATION Calculations 2011 60,000 $ (39,600) 20,400 $ 30%

6,120 $
Correct!

Pretax accounting income Depreciation for tax Taxable income Tax rate Tax payable

$ $ $

2012 80,000 $ (52,800) 27,200 $ 30% 8,160 $


Correct!

2013 70,000 $ (18,000) 52,000 $ 40% 20,800 $


Correct!

2014 70,000 (9,600) 60,400 40% 24,160


Correct!

Straight-line Tax depreciation Temporary differences: 2011 2012 2013 2014

2011 30,000 (39,600) (9,600)

2012 30,000 (52,800) (22,800) (22,800)

2013 30,000 (18,000) 12,000 12,000 12,000

2014 30,000 (9,600) 20,400 20,400 20,400 20,400

Cumulative Temporary Difference

$ $ $ $ $

9,600 32,400 20,400 -

- Correct! - Correct! - Correct! - Correct! - Correct!

Cumulative difference Tax rate Year-end balance Previous balance Credit/(debit)

$ $ $

2011 9,600 $ 30% 2,880 $ 2,880 $


Correct!

2012 32,400 $ 40% 12,960 $ (2,880) 10,080 $


Correct!

2013 20,400 $ 40% 8,160 $ (12,960) (4,800) $


Correct!

2014 40% (8,160) (8,160)


Correct!

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 16-04 ZEKANY CORPORATION General Journal Account Journal entry at the end of 2011 Income tax expense Deferred tax liability Income tax payable Journal entry at the end of 2012 Income tax expense Deferred tax liability Income tax payable Journal entry at the end of 2013 Income tax expense Deferred tax liability Income tax payable Journal entry at the end of 2014 Income tax expense Deferred tax liability Income tax payable Debit 9,000 2,880 6,120 Credit
- Correct!

18,240 10,080 8,160

- Correct!

16,000 4,800 20,800


- Correct!

16,000 8,160 24,160


- Correct!

Given Data P16-04: ZEKANY CORPORATION Asset cost $120,000 2009 $39,600 $60,000 30% 2010 $52,800 $80,000 30% 2011 $18,000 $70,000 40% 2012 $9,600 $70,000 40%

Depreciation Accounting income before tax and depr. Average and marginal income tax rate

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 16-05 DEVILLE COMPANY Calculations 2011 $350,000 (50,000) $300,000 30% $90,000
Correct!

Pretax accounting income Installment sales Municipal bond interest Taxable income Tax rate Income tax payable

2012 $270,000 20,000 $290,000 30% $87,000


Correct!

2013 $340,000 25,000 (15,000) $350,000 25% $87,500


Correct!

2014 $380,000 5,000 $385,000 25% $96,250


Correct!

Temporary differences: 2011 2012 2013 2014

2011 (50,000)

2012 20,000 20,000

2013 25,000 25,000 25,000

2014 5,000 5,000 5,000 5,000

Cumulative Temporary Difference $0 $50,000 $30,000 $5,000 $0 2014 $0 25% $0 (1,250) ($1,250)
Correct!

- Correct! - Correct! - Correct! - Correct! - Correct!

Cumulative difference Tax rate Year-end balance Previous balance Credit/(debit)

2011 $50,000 30% $15,000 0 $15,000


Correct!

2012 $30,000 25% $7,500 (15,000) ($7,500)


Correct!

2013 $5,000 25% $1,250 (7,500) ($6,250)


Correct!

DEVILLE COMPANY General Journal Account Journal entry at the end of 2011 Income tax expense Deferred tax liability Income tax payable Journal entry at the end of 2012 Income tax expense Deferred tax liability Income tax payable Journal entry at the end of 2013 Income tax expense Deferred tax liability Income tax payable Journal entry at the end of 2014 Income tax expense Deferred tax liability Income tax payable Debit 105,000 15,000 90,000 Credit
- Correct!

79,500 7,500 87,000


- Correct!

81,250 6,250 87,500


- Correct!

95,000 1,250 96,250


- Correct!

Given Data P16-05: DEVILLE COMPANY 2011 $350,000 $50,000 2012 $20,000 $15,000 2011 Enacted tax rate 30% 2012 30% 2013 25% 2014 25% 2013 $25,000 2014 $5,000 2012 $270,000 2013 $340,000 2014 $380,000

Pretax accounting income 2011 Installment sale

Cash collected on installment 2013 Interest from investments

Student Name: Instructor Class: McGraw-Hill/Irwin Problem 16-10 FORES CONSTRUCTION COMPANY Requirement 1: Calculations (in millions) Current Future Year Deductible 2009 Amounts (135) 5 10 (10) (120) 105 15 (15) 0 (25) 40% 40% 0 Correct! (10)

Prior Years 2009 2010 Accounting Loss Fine paid Loss contingency Taxable loss Loss carryback Loss carryforward Enacted tax rate Tax payable (refundable) Deferred tax asset

(75)

(30)

40% (30)
Correct!

40% (12)
Correct!

Deferred tax asset: Ending balance (balance currently needed Less: beginning balance Change needed to achieve desired balance

$10 0 $10
Correct!

Journal entry at the end of 2009 Receivable - income tax refund Deferred tax asset Income tax benefit

42 10 52

Requirement 2: Calculations (in millions) Operating loss before income taxes Less: Income tax benefit Tax refund from loss carryback Future tax benefits Net operating loss 135 42 10
Correct!

52 83

Current Year 2012 Pretax accounting Income 60

Future Deductible Amounts

Loss contingency Operating loss carryforward Taxable income Enacted tax rate Tax payable Deferred tax asset

(10) (15) 35 40% 14


Correct!

0 40% 0
Correct!

Deferred tax asset: Ending balance (balance currently needed) Less: beginning balance Change needed to achieve desired balance

$0 (10) ($10)
Correct!

Journal entry at the end of 2010 Receivable - income tax refund Deferred tax asset

24 10 14

- Correct!

- Correct!

Given Data P16-10: FORES CONSTRUCTION COMPANY

Taxable Income Additional Information: 2011 pretax operating loss EPA penalty included in 2011 loss Accrued loss contingency included in 2011 loss Enacted tax rate

2009 $75,000,000

2010 $30,000,000

$135,000,000 $5,000,000 $10,000,000 40%