The following information relates to the accounting income for Withering Press Company (WPC)for the current year ended December 31.
The company had purchased land some years ago for $600,000. Recently,it was discovered that this land is contaminated by industrial pollution. Because of the soil remediation costs required,the value of the land has decreased. For tax purposes,the impairment loss is not currently deductible. In the future when the land is sold,half of any losses is deductible against taxable capital gains (ie.,the other half that is not taxable or deductible is a permanent difference).
The deferred income tax liability account on January 1 had a credit balance of $45,000. This balance is entirely related to property,plant,and equipment (PPE).
Requirement:
Prepare the journal entries to record income taxes for WPC.

Question

The following information relates to the accounting income for Withering Press Company (WPC)for the current year ended December 31.
  The company had purchased land some years ago for $600,000. Recently,it was discovered that this land is contaminated by industrial pollution. Because of the soil remediation costs required,the value of the land has decreased. For tax purposes,the impairment loss is not currently deductible. In the future when the land is sold,half of any losses is deductible against taxable capital gains (ie.,the other half that is not taxable or deductible is a permanent difference).
The deferred income tax liability account on January 1 had a credit balance of $45,000. This balance is entirely related to property,plant,and equipment (PPE).
Requirement:
Prepare the journal entries to record income taxes for WPC.

Quizplus · Accepted Answer

The Answer of The following information relates to the accounting income for Withering Press Company (WPC)for the current year ended December 31.
  The company had purchased land some years ago for $600,000. Recently,it was discovered that this land is contaminated by industrial pollution. Because of the soil remediation costs required,the value of the land has decreased. For tax purposes,the impairment loss is not currently deductible. In the future when the land is sold,half of any losses is deductible against taxable capital gains (ie.,the other half that is not taxable or deductible is a permanent difference).
The deferred income tax liability account on January 1 had a credit balance of $45,000. This balance is entirely related to property,plant,and equipment (PPE).
Requirement:
Prepare the journal entries to record income taxes for WPC.

The Following Information Relates to the Accounting Income for Withering