Deferred taxes Calculated tax expense, taxes payable and deferred tax amounts

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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


This is the form that will be used to grade your assignment:
 

Criteria

Possible Points

Section 1 - Calculation of tax expense, taxable payable & deferred tax amounts

55.0

Section 2 - Presentation in financial statements

15.0

Section 3 - Valuation allowance

10.0

CONTENT

80.0

Utilizes provided layout correctly

10.0

MECHANICS

10.0

TOTAL ASSIGNMENT

90.0

  • 8 years ago
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