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  • IA2-Income Tax

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    CJ Riano
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    The document shows accounting income and adjustments to arrive at taxable income of $7,000,000 for West Company. It then provides requirements to calculate current tax expense, deferred tax asset, deferred tax liability, and total income tax expense. Requirement 6 shows the statement of comprehensive income, reporting net income of $6,750,000 after deducting total income tax expense of $2,250,000 from income before tax.

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    Intermediate Accounting 2 Valix

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    IA2-Income tax

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    The document shows accounting income and adjustments to arrive at taxable income of $7,000,000 for West Company. It then provides requirements to calculate current tax expense, deferred tax asset, deferred tax liability, and total income tax expense. Requirement 6 shows the statement of comprehensive income, reporting net income of $6,750,000 after deducting total income tax expense of $2,250,000 from income before tax.

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    39 views2 pages

    IA2-Income Tax

    Uploaded by

    CJ Riano
    The document shows accounting income and adjustments to arrive at taxable income of $7,000,000 for West Company. It then provides requirements to calculate current tax expense, deferred tax asset, deferred tax liability, and total income tax expense. Requirement 6 shows the statement of comprehensive income, reporting net income of $6,750,000 after deducting total income tax expense of $2,250,000 from income before tax.

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    of 2

    Problem 16-10

    Accounting Income 9,000,000


    Land (3,000,000) DTL
    Machinery and Equipment (1,000,000) DTL
    Inventory 1,500,000 DTA
    Accounts Receivable 500,000 DTA
    Taxable Income 7,000,000

    Req 1
    Income tax expense 1,750,000
    Income tax payable 1,750,000

    Req 2 Deferred tax asset 500,000


    Income tax expense 500,000

    Req 3 Income tax expense 1,000,000


    Deferred tax liability 1,000,000

    req 4 Land (3,000,000)


    Machinery and Equipment (1,000,000)
    Future taxable amount (4,000,000)
    25%
    DTL (1,000,000)

    Req 5 Income tax expense 1,750,000


    Deferred tax asset (500,000)
    Deferred tax liability 1,000,000
    TOTAL INCOME TAX EXPENSE 2,250,000

    Req 6 West Company


    Statement of Comprehensive Income
    for the period Dec 31

    Income before tax 9,000,000


    Less: Income tax expense
    Current tax expense 1,750,000
    Deferred tax Asset (500,000)
    Deferred tax liability 1,000,000 (2,250,000)
    Net Income 6,750,000
    Inventory 1,500,000
    Accounts Receivable 500,000
    Future deductible amount 2,000,000
    25%
    DTA 500,000

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