Solution-What was the opening balance of deferred income

What was the opening balance of deferred income taxes

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Reference no: EM132490465

PPP owns 100% of SSS. You were provided with the following information for intercompany transactions between PPP and SSS during 2018. Assume 40% tax rate.

Point a) On January 1, 2018, PPP had $100,000 worth of inventory it bought from SSS. The gross profit before tax for SSS on this sale $30,000. 95% of this inventory was sold to outside parties during 2018, with 5% remaining unsold.

Point b) On June 30, 2018 PPP sold land to SSS where the gain on the sale (prior to taxes), was $8,000. This land was not sold to outside parties by the end of 2018.

Point c) Also during 2018, PPP sold inventory to SSS for $60,000. The profit before tax on this sale to SSS, was $20,000. At the end of 2018, 25% of this inventory was unsold to outside parties.

Required:

Question a) What was the opening balance of Deferred Income Taxes on January 1, 2018?

Question b) What was the closing balance of Deferred Income Taxes on December 31, 2018?

Question c) What was the realized profit net of tax for 2018 on inventory sales for the consolidated entity?

Reference no: EM132490465

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What was the opening balance of deferred income taxes

Reference no: EM132490465

Reference no: EM132490465

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