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The following facts relate to Krung Thep Corporation: |1. Deferred tax liability, January 1,...

Question:

The following facts relate to Krung Thep Corporation:

1. Deferred tax liability, January 1, 2014, $59,520
2. Deferred tax asset, January 1, 2014, $0.
3. Taxable income for 2014, $141,360.
4. Pretax financial income for 2014, $248,000.
5. Cumulative temporary difference at December 31, 2014, giving rise to future taxable amounts, $357,120.
6. Cumulative temporary difference at December 31, 2014, giving rise to future deductible amounts, $52,080.
7. Tax rate for all years, 30%.
8. The company is expected to operate profitability in the future.

(a) Compute the income taxes payable for 2014.

(b) Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2014.

(c) Prepare the income tax expense section of the income statement for 2014, beginning with the line "Income before income taxes".

Deferred tax liability:

"Deferred tax liability" means the tax payable in the future date. It is calculated be deducting the accounting earning before tax from the taxable income of the organisation. It is shown in the liability side of the balance sheet.

Answer and Explanation:

(a)The income taxes payable for 2014 is calculated below:

Taxable income for 2014, $141,360

Tax rate for all years, 30%.

Income taxes payable for...

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Interperiod Tax Allocation: Permanent & Temporary Differences

from Accounting 202: Intermediate Accounting II

Chapter 8 / Lesson 4
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