Eight independent situations are described below. Each involves future deductible amounts and/or future taxable amounts: ($...
Eight independent situations are described below. Each involves
future deductible amounts and/or future taxable amounts:
| ($ in millions) | |||||||||||
| Temporary Differences Reported First on: | |||||||||||
| The Income Statement | The Tax Return | ||||||||||
| Revenue | Expense | Revenue | Expense | ||||||||
| 1. | $31 | ||||||||||
| 2. | $31 | ||||||||||
| 3. | $31 | ||||||||||
| 4. | $31 | ||||||||||
| 5. | 26 | 31 | |||||||||
| 6. | 31 | 26 | |||||||||
| 7. | 26 | 31 | 21 | ||||||||
| 8. | 26 | 31 | 16 | 21 | |||||||
Required:
For each situation, determine taxable income assuming pretax
accounting income is $210 million. (Enter your answers in
millions (i.e., 10,000,000 should be entered as 10).)
Homework Answers
Answer :
| Year | Taxable income ( $ in millions) |
|---|---|
| 1 | $241 |
| 2 | $179 |
| 3 | $241 |
| 4 | $179 |
| 5 | $215 |
| 6 | $267 |
| 7 | $194 |
| 8 | $210 |
Explanation :
Taxable income :
Pretax accounting income - Income Statement (Revenue) + Income Statement ( Expense) + Tax Return (Revenue) - Tax Return ( Expense).
Year 1 = $210 + $31 = $241 millions.
Year 2 = $210 - $31 = $179 millions.
Year 3 = $210 + $31 = $241 millions.
Year 4 = $210 - $31 = $179 millions.
Year 5 = $210 - $26 + $31 = $215 millions.
Year 6 = $210 + $31 +26 = $267 millions.
Year 7 = $210 - $26 + $31 - $21 = $194 millions
Year 8 = $210 - $26 + $31 +16 - $21 = $210 millions.
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