Question

The following information was disclosed during the audit of Crane Inc. Amount Due per Tax Return Year 1. 2017 $134,300 2018 105,300 2. On January 1, 2017, equipment costing $583,900 is purchased. For financial reporting purposes, the company uses straight-line depreciation over a 5-year life. For tax purposes, the company uses the elective straight-line method over a 5-year life. (Hint: For tax purposes, the half-year convention as discussed in Appendix 11A must be used.) 3. In January 2018, $222,900 is collected in advance rental of a building for a 3-year period. The entire $222,900 is reported as taxable income in 2018, but $148,600 of the $222,900 unearned revenue in 2018 for financial reporting purposes. The remaining amount of unearned revenue is to be recognized equally in 2019 and 2020. reported as 4. The tax rate is 40% in 2017 and all subsequent periods. (Hint: To find taxable income in 2017 and 2018, the related income taxes payable amounts will have to be "grossed up.") 5. No temporary differences existed at the end of 2016. Crane expects to report taxable income in each of the next years. X Your answer is incorrect. Try again. Determine the amount to report for deferred income taxes at the end of 2017, and indicate how it should be classified on the balance sheet. The amount to report for deferred income taxes Crane Inc. Balance Sheet 'December 31, 2017

Answer 1

solution Given that Deferred Taze Temposaday differences Future Tazable (bed") Amounts Taze Rate Liability (ASSA $23357 Depoeciation $(58390) 404% uneaoned sent 74300 uos 29720 onearsned sent 74300 40% 29720 $(22796) Totals $(206990) Temposady comming Defer old Tax Realated Balance Differences (Asses) Liability sheet Account classificatie Depreciation $23356 Plant Assets Now (480er on laoned sent 29720 oneaoned Rent cuorent unea oned Revy Noncurger loneaoned sent 29720 Totals cuocent assets Di teaged Assefs ... $29720

othed Assets (Non candent) Deftooed asset - $53076(23356+2972 - Draft the income taxe section of the income statement 2018 beginning with "income befase income taces. Income before income taxes $123.050d Income tare expenses cuorent - $105,300 Defended — 5 quu082796 - 23356)458 net income - $77190 a poetale financial income $x