Calculate the deferred tax account balance as at december

Assignment Help Financial Accounting
Reference no: EM132525926

Denison Corp. is a publicly traded company and is currently preparing its financial statements for its 20X7 year ended. Denison's accounting income before tax is $1,800,000. The following items have been recorded in accounting income as an expense or revenue item, as appropriate:

Depreciation and amortization expense $1,420,000

Dividend revenue from a taxable Canadian corporation $450,000

Fines for polluting the environment $90,000

Gain on sale of equipment $310,000

Life insurance premium expense $25,000

Meals and entertainment expense $390,000

Warranty expense $680,000

Additional information:

1. At December 31, 20X6, the net book value of the equipment was $9,700,000. During 20X7, new equipment additions totalled $450,000.

2. At December 31, 20X6, the undepreciated capital cost of the equipment was $7,400,000.

3. At December 31, 20X6, the warranty payable was $850,000.

4. During 20X7, the company sold equipment for net proceeds of $1,450,000, which had a net book value of $1,140,000 and an original cost of $2,100,000.

5. During 20X7, development costs of $520,000 were capitalized, which is the outstanding balance at December 31, 20X7. These costs are fully deductible for tax purposes.

6. In 20X7, Denison paid warranty costs of $720,000.

7. Capital cost allowance for 20X7 is $1,130,000. 8. During 20X7, Denison paid $140,000 in income tax instalments. These were debited to an income tax instalment account. 9. On July 1, 20X7, the government announced that the tax rate was increasing from 28% to 30% effective January 1, 20X8.

Required:

Question a) Calculate the deferred tax account balance as at December 31, 20X6.

Question b) Calculate the deferred tax account balance as at December 31, 20X7, the current tax expense for the year ended December 31, 20X7, and the deferred income tax expense for the year ended December 31, 20X7.

Question c) Prepare the journal entries to record the current and deferred income tax expense for 20X7.

Reference no: EM132525926

Questions Cloud

Identify key terms and state why believe each is relevant : As of December 31, year 2, Marvin Corporation received the vehicle. Identify the key terms, and state why you believe each is relevant to your case.
What are the essential ingredients of a symmetric cipher : What are the essential ingredients of a symmetric cipher? How many keys are required for two people to communicate via a symmetric cipher?
Describe execution of reconnaissance and enumeration : Execution of Reconnaissance and Enumeration: You will use ping, traceroute, and Nmap to determine the network topology and layout with the types of systems.
Calculate the current rates : Using the unbiased expectations theory, calculate the current (long-term) rates for 1-, 2-, 3-, and 4-year-maturity Treasury securities.
Calculate the deferred tax account balance as at december : Calculate the deferred tax account balance as at December 31, 20X7, the current tax expense for the year ended December 31, 20X7
Explain the cryptocurrencies with applicable examples : The vast majority of the population associates Blockchain with cryptocurrency Bitcoin; however, there are many other uses of blockchain; such as Litecoin.
How to record orion investment in dfel : Orion, is a board member of DFEL and plans to be more involved in DFEL's decision-making. The issue here is how to record Orion's investment in DFEL.
Paradigms shifts in information technology history : According to Crocker and Smallwood, cloud computing represents one of the most significant paradigms shifts in information technology (IT) history,
Prepare a statement of cash flows in accordance : Using the direct method of presenting cash flows from operating activities, prepare a statement of cash flows in accordance with AASB 107/IAS 7

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd