Ch16 in class

Req 1 20x7 Income Tax payable Accounting income before taxes $ 200,000 Expenses not deductible for I/T $ 16,000 Depreciation expense $ 100,000 CCA -$ 180,000 Taxable Income $ 136,000 Current tax rate 30% Income Tax payable $ 40,800 Change in def. IT accounts Capital assTax basis acctg. Basis ending temp. di 20x7 $ 2,320,000 $ 2,900,000 -$ 580,000 20x8 $ 2,170,000 $ 2,800,000 -$ 630,000 20x9 $ 2,030,000 $ 2,700,000 -$ 670,000 Income TaxExpense = 20x7 current I/T expense $ 40,800 deffered I/T expense 24000 Income Tax expense $ 64,800 Req. 2 Change in deferred income tax accounts Due to change in tax rate 20x7: no change 0 20x8: -580,000 * (26%-30%) 20x9: -630,000*(24%-26%) due to new temp diff 20x7: -80000x30% -$ 24,000 20x8: -50000 x 26% 20x9: -40000x 24% Change in deferred income tax accou -24000 Req. 3 to caluclate deferred income taxes, you must use tax Income tax payable Capital assTax basis acctg. Basis ending temp. di 20x7 2320000 2900000 -580000 picture

20x8 20x9 $ 240,000 $ 300,000 $ 20,000 $ 12,000 $ 100,000 $ 100,000 -$ 150,000 -$ 140,000 $ 210,000 $ 272,000 26% 24% $ 54,600 $ 65,280 deferred I/t opening def. IT adjustment -$ 174,000 -150000 -$ 24,000 -$ 163,800 -$ 174,000 $ 10,200 -$ 160,800 -$ 163,800 $ 3,000 20x8 20x9 $ 54,600 $ 65,280 -$ 10,200 -$ 3,000 $ 44,400 $ 62,280 $ 23,200 $ 12,600 -$ 13,000 -$ 9,600 10200 3000 x rate that will be in effect when term difference will reverse. If reversals are expected beyond period for the t $ 40,800 deferred I/t opening def. IT adjustment -174000 -150000 -24000