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Chapter 16 Accounting for Income Taxes
EXERCISES
Exercise 16-1
Since taxable income is less than accounting income, a future taxable amount
will occur when the temporary difference reverses. This means a deferred tax liability
should be recorded to reflect the future tax consequences of the temporary difference.
($ in millions)
Income tax expense (to balance) 28.0
Exercise 16-2
Income tax expense (to balance) 249,000
16–2 Intermediate Accounting, 8/e
Exercise 16-3
Requirement 1
($ in millions)
Current Future
Year Deductible
2016 Amounts
Temporary difference: (280)
Journal entries at the end of 2016
Income tax expense (to balance) 296
Alternate Exercises and Problems 16–3
Exercise 16-3 (concluded)
Requirement 2
($ in millions)
Income tax expense (to balance) 296
16–4 Intermediate Accounting, 8/e
Exercise 16-4
Requirement 1
($ in thousands)
Current Future Future
Year Taxable Taxable
2016 Amounts Amounts
2017 2018 2019
Accounting income 900
Permanent difference:
Requirement 2
($ in thousands)
Pretax accounting income $900
Alternate Exercises and Problems 16–5
Exercise 16-5
Income Statement
For the fiscal year ended June 30, 2016
($ in millions)
Revenues $415
Cost of goods sold (175)
16–6 Intermediate Accounting, 8/e
PROBLEMS
Problem 16-1
Requirement 1
($ in millions)
Current Future Future
Year Taxable Taxable
2016 Amounts Amounts
2017 2018 2019 [total]
Accounting income 68
Journal entry at the end of 2016
Alternate Exercises and Problems 16–7
Problem 16-1 (concluded)
Requirement 2
($ in millions)
Current Future Future
Year Taxable Taxable
2017 Amounts Amounts
2018 2019 [total]
Accounting income 60
Deferred tax liability:
Journal entry at the end of 2017
Requirement 3
The balance in the deferred tax liability account at the end of 2017 would have
been $12.8 million if the new tax rate had not been enacted:
16–8 Intermediate Accounting, 8/e
Problem 16-2
Requirement 1
($ in 000s)
Current Future
Prior Years Year Deductible
2014 2015 2016 Amounts
[total]
Accounting loss (540)
Permanent difference:
Deferred tax asset:
Requirement 2
($ in 000s)
Operating loss before income taxes $540
Less: Income tax benefit:
Alternate Exercises and Problems 16–9
Problem 16-2 (concluded)
Requirement 3
($ in 000s)
Current Future
Year Deductible
2017 Amounts
Accounting income 240
Deferred tax asset:
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