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Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver
Edition 3ISBN: 978-0132962339Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver
Edition 3ISBN: 978-0132962339 Exercise 12
Computing and recording a corporation's income tax
The accounting records of Rhyme Redwood Corporation provide income statement data for 2012.
Total expenses include depreciation of $50,000 computed on the straight-line method. In calculating taxable income on the tax return, Rhyme Redwood uses the modified accelerated cost recovery system (MACRS). MACRS depreciation was $80,000 for 2012. The corporate income tax rate is 34%.
Requirements
1. Compute taxable income for the year. For this computation, substitute MACRS depreciation in place of straight-line depreciation.
2. Journalize the corporation's income tax for 2012.
3. Show how to report the two income tax liabilities on Rhyme's classified balance sheet.
The accounting records of Rhyme Redwood Corporation provide income statement data for 2012.
Total expenses include depreciation of $50,000 computed on the straight-line method. In calculating taxable income on the tax return, Rhyme Redwood uses the modified accelerated cost recovery system (MACRS). MACRS depreciation was $80,000 for 2012. The corporate income tax rate is 34%.
Requirements
1. Compute taxable income for the year. For this computation, substitute MACRS depreciation in place of straight-line depreciation.
2. Journalize the corporation's income tax for 2012.
3. Show how to report the two income tax liabilities on Rhyme's classified balance sheet.
Explanation
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Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver
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