Cpa Paper

The following information is available for the first three years of operations for Jedi Corporation:

1. Year Taxable Income

2011 $250,000

2012 180,000

2013 200,000

2. On January 2, 2011, heavy equipment was purchased for $500,000. The equipment had an

estimated service life of 5 years and no residual value. The straight-line method of

depreciation is used for book purposes and the CCA rate of 30% is used for tax purposes.

3. On January 2, 2012, $210,000 was collected in advance for the rental of a building for three

years. The entire $210,000 was included in taxable income in 2012, but two-thirds of the

$210,000 was reported as unearned revenue at December 31, 2012 for book purposes.

4. The enacted tax rate is 40% for all years.

Instructions

(a) Prepare a schedule comparing depreciation for book purposes with CCA for tax purposes.

(b) Determine the future income tax asset or liability at the end of 2011.

(c) Prepare a schedule of future taxable and deductible amounts at the end of 2012.

(d) Prepare a schedule of the future income tax asset and liability at the end of 2012.

(e) Calculate the net future income tax expense or benefit for 2012.

(f) Prepare the adjusting journal entries to record income tax expense, future income taxes, and

income tax payable for 2012.

Chapter 18

Item Description

P18-61 Taxable income and accounting income.

P18-62 Taxable temporary difference.

P18-63 Differences between accounting and taxable income and effect on future

income taxes.

P18-64 Multiple reversible differences.

P18-65 Interperiod tax allocation with change in enacted tax rates.

P18-66 Deferred income tax asset.

P18-67 Comprehensive income tax situation with multiple differences.

Chapter 19

Item Description

P19-81 Measuring and recording pension expense.

P19-82 Preparation of a pension work sheet and pension entries.

P19-83 Amortization of past service costs using EARSL.

P19-84 Measuring, recording, and reporting pension expense and...