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CASES
Analysis Case 16–1
Requirement 1
Temporary differences originate in one or more years and reverse in one or more
Requirement 2
Intraperiod tax allocation allocates the total income tax expense for a reporting
period among the financial statement items that gave rise to the income tax expense.
Requirement 3
Deferred tax liabilities are not reported individually, but instead combined with
16–10 Intermediate Accounting, 8e
Integrating Case 16–2
Requirement 1
Because postretirement costs aren’t tax deductible until paid to, or on behalf of,
Requirement 2
Integrating Case 16–3
($ in 000s)
Fair value adjustment (to balance) ......................................... 339
Integrating Case 16–4
a. This is a correction of an error.
To correct the error:
2016 adjusting entry:
b. This is a correction of an error.
To correct the error:
Case 16–4 (continued)
c. This is a change in accounting principle and is reported retrospectively.
To record the change:
Inventory (given) .................................................................. 960,000
16–14 Intermediate Accounting, 8e
Case 16–4 (continued)
d. This is a correction of an error.
To correct the error:
Retained earnings (net effect) ...................................................... 9,300
e. This is a change in estimate resulting from a change in accounting principle and is
accounted for prospectively.
No entry is needed to record the change
2016 adjusting entry:
Depreciation expense (calculated below) .................................. 57,600
Case 16–4 (concluded)
f. This is a correction of an error.
To correct the error:
Equipment (cost) .................................................................. 1,000,000
2016 adjusting entry:
Depreciation expense ($1,000,000 ÷ 10) .............................. 100,000
16–16 Intermediate Accounting, 8e
Communication Case 16–5
To: Mr. Randy Patey
From: <your name>
Re: Accounting for income taxes
Below is a brief overview of accounting for income taxes and its application to our
situation.
Real World Case 16–6
Requirement 1
The journal entry that summarizes the entries Walmart used to record fiscal year-
end 2014 income taxes associated with continuing operations can be reconstructed
from the information provided in the note:
Requirement 2
The net deferred tax liability increased by $101 ($3,313 – 3,212), which differs
© The McGraw-Hill Companies, Inc., 2016
Research Case 16–7
An objective of this case is to acquaint the student with information provided by
the Treasury Department and the IRS on the Internet, and in particular the ability to
Analysis Case 16–8
1. Deferred tax assets and deferred tax liabilities are classified as either current or
2. Net current and net noncurrent amounts are presented in the balance sheet, while
total deferred tax assets and total deferred tax liabilities are presented in the
disclosure note. Despite this difference in classification, the numbers shown in the
16–20 Intermediate Accounting, 8e
Analysis Case 16–9
1. As an example, Kroger's February 1, 2014, income statement reports the income
tax expense for the year as $751 million. The current portion is $638 + 42 = $680
2. Deferred tax assets and deferred tax liabilities are classified as either current or
noncurrent according to how the related assets or liabilities are classified for
financial reporting. A deferred tax asset or deferred tax liability is considered to
Judgment Case 16–10
Requirement 1
Requirement 2
If we follow the argument above, we would reduce the numerator by the deferred
tax: $(21,634 – 6,249) – 1,658. Reducing liabilities would necessitate also
Requirement 3
The counterargument to this approach, though, is similar to other situations in
16–22 Intermediate Accounting, 8e
Trueblood Case 16–11
Trueblood Case 16–12
Judgment Case 16–13
Requirement 1
($ in millions, except per share amounts)
RUSSELL-JAMES CORPORATION
Income Statement
For the year ended December 31, 2016
Revenues $300
Discontinued operations:
Loss from operations of cosmetics division,
Per share of common stock (100 million shares):
16–24 Intermediate Accounting, 8e
Case 16–13 (concluded)
Requirement 2
Air France–KLM Case
Requirement 1
AF reported €436 million of deferred taxes at December 31, 2013 as a noncurrent
Requirement 2
Requirement 3
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