中级会计学英文课件 .ppt

E19-1 South Carolina Corporation has one temporary difference at the end of 2007 that will reverse and cause taxable amounts of $55,000 in 2008, $60,000 in 2009, and $65,000 in 2010. South Carolina’s pretax financial income for 2007 is $300,000, and the tax rate is 30% for all years. There are no deferred taxes at the beginning of 2007. Instructions Compute taxable income and income taxes payable for 2007. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2007. LO 2 Describe a temporary difference that results in future taxable amounts. Future Taxable Amounts and Deferred Taxes LO 2 Describe a temporary difference that results in future taxable amounts. Future Taxable Amounts and Deferred Taxes a. a. Illustration Columbia Corporation has one temporary difference at the end of 2007 that will reverse and cause deductible amounts of $50,000 in 2008, $65,000 in 2009, and $40,000 in 2010. Columbia’s pretax financial income for 2007 is $200,000 and the tax rate is 34% for all years. There are no deferred taxes at the beginning of 2007. Columbia expects to be profitable in the future. Instructions Compute taxable income and income taxes payable for 2007. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2007. LO 3 Describe a temporary difference that results in future deductible amounts. Future Deductible Amounts and Deferred Taxes LO 3 Describe a temporary difference that results in future deductible amounts. Future Deductible Amounts and Deferred Taxes a. a. Deferred Tax Asset—Valuation Allowance A company should reduce a deferred tax asset by a valuation allowance if it is more likely than not that it will not realize some portion or all of the deferred tax asset. “More likely than not” means a level of likelihood of at least slightly more than 50 percent. LO 4 Explain the purpose of a deferred tax asset valuation allowance. Future Deductible A